How can a $40.00 load of wood result in insurance company denying to pay claim for their insured client?

First, please understand that I am not licensed to practice law in Tennessee, nor am I familiar with your specific insurance policies in TN. That said, I suspect the insurance company is relying on what is referred to as a "business pursuits" exclusion in the policy (these are common). Of course, the burden of proof on establishing applicability of a policy exclusion typically rests with the insurance company. If this was the only time the insured sold firewood, there may be an argument in favor of finding it was not a "business" so as to trigger the exclusion.

Secondly, you should check your parent's insurance policy (or call their insurance agent) to see whether they carried uninsured motorist property damage coverage. If so, that may cover the damage.

Lastly, I would talk to the insurance adjuster from your parents insurance company and see whether they might be able to pay the claim and waive the deductible under the circumstances, since they have the right to seek reimbursement (subrogation) from the owner of the vehicle that caused the damage. Of course, if all else fails, remember that even though the defendant's insurance company denied coverage, that has no effect on the defendant's liability - he is still responsible for the damage whether he has insurance coverage or not.

Best of luck to you and, as always, it is best to consult a local attorney to guide you on this.