Can a bank refuse to cash an ins ck until repairs are completed when it's issued to the insured party as well

The insurance company paid on a claim and issued the check to the insured party and the lein holder (A Credit Union). When the insured party presented the check to be cashed the lein holder refused to cash the check until the repairs were completed to the car. The claim check included personal property loss as well as the damage to the car. Question does the lien holder(the credit union) have the right to hold the funds that have been paid? This is limiting the utilization of the funds and also depriving the insured of replacing personal loss that was also included in the claim. If the check is issued and it reads ';Pay to the order of Mr.B(the insured) AND The Credit Union (The lein holder)'; and the account is not in default, how can the insured receive his claim? And does the credit union have any claim to the funds issued?