Insurance question. Please help?

Just had a quick question. Basically, my car got totaled due to an accident recently. I still owed the majority of the loan of the car which was about 15k. The total value of the car which insurance was going to pay is about 17k. Insurance paid off the remainder of the loan and i was left with 2k. I was wondering, for future reference, is it possible for insurance to give me the check for 17k instead of first paying off the lien? Or is it some sort of requirement for them to first pay off the existing lien and then give me the remainder? The reason i ask is because i found a private seller selling the same type of car for 16k. And i was thinking if they had given me the 17k upfront, I couldve bought the car upfront for 16k and then couldve used the remaining 1k towards my original loan and continued to have paid monthly on the old car's loan, while completely paying off the "new' car. And it would've saved me the hassle of making a new loan. Or does it not work like this?