Can any insurance company assign themselves as a power of attorney to a vehicle. And if so why?

From what you say, the insurance company did not "assign themselves a power of attorney". Your father signed a document giving them that power. If the vehicle is totalled, a person's insurance company has an obligation to pay the market value of the vehicle. They do not have to replace the vehicle. If the person does not agree with the insurance company's evaluation of market value they do not have to accept what the insurance company offers. The issue can be negotiated and possibly arbitrated depending on the terms of the insurance policy. It was your father's responsibility to know the market value and decided whether or not to accept what the insurance company offered. Once the matter is settled it is not uncommon for the insurance company to a power of attorney so they can obtain title to the vehicle. If the insurance company paid the bank loan, the lien should be satisfied and removed. Your father should contact the bank and find out why it hasn't. This response is general in nature and is not legal advice. No attorney client relationship is formed by it. Further, the response does not represent the opinions or views of LexisNexis or its affiliated companies.