You first need to contact your insurance carrier with your concerns and request from them copies of any documentation they have concerning the alleged damages.
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This entire matter needs to be turned over to your wife's insurance carrier and ask them to defend and indemnify her. Sounds like your wife is responsible for the damages.
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Your wife. Fortunately, she's got coverage. Unlsess your wife wants to pay the damages out of pocket, I'd report it to your auto liability insurance carrier.
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