This sounds more like a dispute between and all risk vs named peril policy. Wawanesa may have a named driver policy in which only the insured and their spouse are eligible drivers of the car.
When this is the case you need to then go after the insurance carrier for whoever was actually driving the car and have them subrogate out the mess. You have option with respect to the 500 deductible. Pay the deductible and then wait to be reimbursed when everything settles out or simply create a paper trail take notes and get in contact with all parties.
The University of San Diego offers a free legal clinic. You may want to see if they cover this area of the law http://www.sandiego.edu/law/free_legal_assistance/
