Since you have an attorney you really need to ask him/her this question. We are not here to second guess legal strategies.
Not all cases have to be filed. If there is a settlement then no need for a lawsuit. Also, no case can be settlement until you are done treating and your doctor has released you.
What your friend has to do is notify her insurance company ASAP. In cases like these property damage and injury claims are handled separately. The property damage is resolved first, with no bearing on any potential injury claim. If the person was injured and sues your friend, she has to turn it over to their insurance company.
If you have low insurance limits them you should talk with a local personal injury attorney because your insurance company has a good faith duty to settle the claim within your policy limits.
Given your potential pre-existing conditions and the extent of your current complaints I would definitely recommend that both you and your wife talk with a local personal injury attorney ASAP. Do not talk to the insurance company until you meet with an attorney.