Legal Question in Civil Litigation in California

Tender the lawsuit to your insurance carrier immediately -- i.e. fax the carrier the small claims complaint, and remind the insurance carrier in a cover letter of the trial date. See if you can get to speak to someone at the carrier, as they are supposed to be there to protect you. Ideally, they should pay the owner of the parked car and then sue the pedestrian. You might have to pay the deductible, though. If your wife must go to court, she should file a counter-claim against the pedestrian if she knows who it is. If she doesn't, in any case, your wife should raise that as her defense.

Mr. Cohen's comments are excellent. But you should also remind the insurance company that they are opening themselves up to a bad faith lawsuit for not defending you [the duty to defend is broader that to pay for the damages] and compensating you. They can not appear at trial but should prepare you for the matter is they can not settle it before hand. If they do not act, also report them to the Insurance commissioner.

If your insurance refuses to defend and indemnify you and your wife for this loss, feel free to call me so we can sue your insurance company for bad faith.