Lien holders filed a claim on my insurance after they repossessed my car- They told the insurance company that I was in an accident- The truth is I never was. Is this legal?

What they (probably) told your insurance company is that there was damage to the vehicle when they repossessed it. You should get in touch with the company or your agent and find out how extensive and what kind of damage the lienholder reported. You see, the lienholder might have reported damage you decided you could live with, something you were not aware of, or even something which happened subsequent to them repossessing the vehicle.

Find out what the damage is, first...then work on putting together a defense. If it is nothing more than a cracked windshield, it should not effect your future premiums.