Right. The reason her homeowner's policy would pay your damages is because part of that insurance policy is liability coverage for her. It keeps you from suing her. Homeowners have to have liability coverage, because for example in this case if she had no liability insurance, and insufficient onhand liquid assets to pay the damages (to you for out of pocket, and to your health insurance for their part of the costs), she would get sued. The house, being her biggest asset, would be what you (and your health insurance) would be going after in such a suit. It could be sold off and part of the proceeds go to reimbursing you and your insurance company. Of course all this is very messy, takes a long time, and is very expensive to administer. Not to mention risky for the bank that holds the mortgage (what if the house is worth less than the outstanding mortgage minus damages?). So, all homeowners are required to carry a reasonable amount of liability insurance as part of the requirements for getting a mortgage. Sure it protects the homeowner, but mostly it's there to protect the bank's asset.
She is probably thinking to pay the out of pocket costs herself to keep it off the insurance records, because her rates could go up, or she might even be dropped by the insurance company and have to buy more expensive insurance somewhere else. But she probably doesn't understand that the big costs, which the health insurance paid to the hospital, are her responsibility as well, and no matter what you and her want to do, the health insurance co is going to come a-knockin' at her door. Best to do it cleanly, all through the insurance company. There really is no advantage to her to pay part of it herself.
@djs and
@rfjustin made good points. It will be a while before the full extent of things is known, and the claim should be made immediately while everyone's memory is still fresh. Now that you have her insurance info, a claim should be made immediately. Just state the facts, and that you don't have all the bills yet, and you will be waiting to detail the specifics. Offer full cooperation in their investigation (expect them to be a bit skeptical). Always be positive and polite.
Good luck. I'll be interested to hear how it goes.
