Denial of Coverage: Driver was insured, but car wasn't?


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TL;DR: Wife was hit by another driver who provided insurance policy number from PEMCO. PEMCO is denying coverage saying driver was insured, but car driver was driving was not on their policy. Does liability not cover insured driver's actions regardless? ELI5?

So longer version, my wife was driving when another car failed to yield and pulled into her (center) lane from a parking lot and hit her head on. My wife who was 38-wks pregnant at the time was immediately taken to a hospital (where we got an emergency C-Section and have a healthy baby boy!).

Car was totaled out. Police filed a report, cited the other driver, and had the insurance policy included in the report. In following up with the other insurance company, our insurance company discovered that while the driver had an insurance policy, the car she was driving was not on her policy. They are therefore denying coverage.

So, liability does not cover the actions of the driver, but explicitly tied to a car? Therefore, to get anything from her, (medical bills etc) we have to sue her directly? That seems weird to me, but I think that's what I'm discovering? Just looking to understand coverage a little better.

(*Too avoid obvious comments/ questions: I do have full comprehensive and Under-Insured Motorist coverage, so I'm not sweating it too bad yet. I have also lawyered up, so looking to see where that goes.)

(edit: grammar)

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