Can insurance pay lien holder without my approval in case of total loss?
They do not need your approval. And It isn’t their choice, They legally MUST pay the lien holder. It (legally) isn’t even your car. It belongs to the lien holder. Read your loan contract and you will understand. You will see the words “loss payee” or similar words. The loss payee will be your lien holder.
They don’t need your approval. The lien holder is the loss payee. They are the first to get paid in the event of a loss. Period. It's not a contract thing, it's the law.
Your insurer is bound by law to protect the financial interest of your lien holder.
So you have two choices:
Release the vehicle, and it goes to the insurance company. Or don’t, and get the wrecked vehicle back. In either scenario, your lien holder gets the money.
They can try, but I would keep fighting them on it. I would call the state insurance commission and complain about this. I would also call the lien holder and tell them not to accept any money from the insurance company. You may want to drag them to small claims court. It is a big pain for them and cost you nearly nothing. I believe CA allows up to $10,000 in small claims.
I’m assuming you have some disagreement over value of the bike with them and they are trying to low ball you.