A friend of mine had the same experience from the other side. She ran into some guy's car, apologised for her mistake and told him not to worry because she was fully covered. The first sign that something wasn't right was when a summons to appear at the magistrate's court appeared in the letter box.
She asked the insurance company what was going on and they said "just send the paper work to us and don't worry, we'll take care of it".
Then she got a knock on the door from a pair of court-appointed officers who were there to discuss her financial situation and assist her in arranging a payment plan to pay off her fine. Her insurance company had not sent a representative to the trial, so the magistrate found in favour of the only party that had turned up.
After some screaming on the phone, the insurance company paid the full amount of the judgement.
Any judge worth his salt will understand the global implications (courts clogged with litigants, inability of poor people to use cars) if insurance companies stonewall when their client is at fault, whatever the odd lot who comment in HN think. The judge should hit the other party.
Bear in mind that this is a matter of public interest and romwell has not signed an NDA. S/He should name that insurance company!