Loss Payable Clause on Personal Auto Policy

Our question is whether, if a loss payee is named on an auto policy, the insurer can arbitrarily pay the insured without including the name of the loss payee. The loss payee endorsement reads, in part: payment for loss to a covered vehicle will be made according to your interest and the interest of any loss payee or lienholder shown on the declarations page or designated by you; payment may be made to both jointly, or separately, at our discretion.

We have always been under the impression that that wording meant that if an individual had some equity in an auto and a small balance on the car loan, the insurer would pay the loan company for its interest and the insured for his. But, the insurer now is interpreting the wording to mean that, regardless of the lienholder's interest, the insurer can pay the insured alone and ignore the loss payee altogether. What is your interpretation?