was the car totalled? when did the insurance company pay the lender? did the insurance company pay the loan in full or were you 'upside down' (you owed more than the car was worth. 

If you can answer those questions, it makes guiding you easier.

have you called the lender to ask for an explanation? if yes, what did they tell you? 

Your question is a legal question, not a tax question.  This is an income tax forum.