Finance companies typically require you to carry damage coverage on your car. If you had damage coverage, your insurance would have paid for the repairs to your car and that would have nothing to do with your car loan.
Why was the car repossessed?
And why didn't your own insurance cover the repairs?
As for suing the other driver, you can certainly sue for the repair cost (which has nothing to do with whatever you lose on the loan) but I still don't see where the other driver is at fault.