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if the insurance company doesn't pay, call your state's insurance regulators. they can probably help you out. the insurance companies don't give one shit about their customers typically 'cause they have a guaranteed market (in most states) but they do care about being able to sell insurance in the state.
good luck though. that he was still on the policy is bad news, it'll be nearly impossible to prove he stole the car unless she can somehow prove that she did actually request he be removed. did the insurance premiums drop after that request was made?
btw: i'm surprised the ins. co didn't boot him off/demand higher premiums themselves when he got his DUI.
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