You're responsible if your dog bit him, but if he doesn't know which dog, you're not necessarily responsible just because your dog was involved. Dogs are dogs. Why not offer to split the bill(s) with him?
Potentially yes. Even if it wasn't your dog that bit him, he could make the argument that you're responsible for letting the dog get into his yard, which (you could reasonably have anticipated) triggered the fight with his dogs, and caused the injury. But if you apologize, offer to help him with his bill, and take steps to avoid this happening again, then he may not feel the need to file any lawsuit - and even if he does, then if you've acted to reduce any actual damage he's suffered, you're better off. You can only sue for damage you've truly incurred.
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You are indeed responsible for your dog so I would report the claim to your homeowners policy. I agree with Mr. cammisar that splitting the bills is an equitable solution.
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