I am an attorney and I would be happy to help you. Your story is heartbreaking and very sad for everyone involved Situations like this are unfortunate, but it is not your fault. First, you need to make the claim to your insurance company. This is because the accident occurred in the middle of the road, not on the dog owner's property (homeowner's insurance does not typically cover auto accidents or dogs). I realize your rate may go up slightly, but it will not go up as high as you think. Additionally, if you report the claim to your insurance carrier, they are later obligated to defend you if you are sued. The cost of merely retaining a defense attorney is typically $5,000 - $10,000, which the insurance company must pay (less your deductible of course). Therefore, it is important to file your claim with the insurance company! If you do not file the claim and do it promptly, they will not assist you if you are sued. Additionally, the insurance company has the right to sue the dog owner if they feel inclined to do so to reimburse the insurance company for the costs they will pay to repair your vehicle. That will be the insurance company's decision.
With regards XXXXX XXXXX poor dog who passed, pets are seen as personal property. The most a person can be sued after an accident involving a pet is the value of the pet and any veterinarian fees incurred. However, the pet owner must prove you were negligent. In CA, the pet owner will only recover under the‘pure' comparative negligence
standard. That means that the plaintiff will only recover damages after his percentage of fault has been deducted. Example) The Vet fees were $5,000 and the judge found you 10% at fault, then you would only have to pay $500.00. Based on the facts you have provided, I feel it would be in your best interest to not pay the neighbors and make them take you to court since a reasonable juror or judge could find you were not 100% at fault and should not be responsible for the vet fees.
In conclusion, go forward with filing your insurance claim and attempt to avoid the neighbors as much as possible. i hope my answer has assisted you and that you will provide me a positive rating!