Should I get a lawyer and sue my insurance company?

Almost 2 months ago my 12 year old nephew took my car without permission. In the process he wrecked it. My insurance company refuses to pay to repair it stating he was not on my insurance. But who puts a 12 year old on their insurance? Or, gives he/she permission to drive? Following this they sent documentation that attempted to substantuate this. However, one of the clauses specify the age requirement as 14 and up, and that he/she be a resident, neither of which my nephew is. I forwarded this document to the State Insurance Commission, who promptly began to investigate. My insurance company also sent me papers requesting that I sign papers that state my nephew is exempt and threaten to suspend my insurance policy if I didn't. Lately, they resume regular bank draft notices