Just went through an incredibly similar incident (neighbor's wife was in hospital when happened and died like a day after the incident). Report it to your insurance company and make sure you let your neighbor know you did so. Don't admit fault. If your insurance company thinks they are not liable believe me they will tell him. You and I both know they will not pay a dime they don't have to!
In my case we both had the same ins co. My agent said it should be his policy but the adjuster would be the one to make the decision. I will say this, and I know it was a stressful time for him so I'll cut him a break, the ins co apparently didn't call him fast enough for him because a couple days after I reported it (and I told him I did) he rang my door bell told me they hadn't paid him and said, "there are other ways to take care of the problem"--not sure his intentions but... I called the ins co again, reported the incident and asked that my agent call him immediately and explain what was going on.
A few weeks later he saw me out at the road and stopped--didn't call the incident just said hi and something about going to his wife's grave site. I never asked who's policy paid out--not sure I want to know--that's why I have ins.
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