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Good question, I would have assumed (could be very wrong) that it would be like car insurance. Someone makes a claim against you, they get in touch with your insurance and they handle it. Surelyif the old lady is suing you for say..1 million and you have liability insurance, it would be in...

People try alot of things, and dont think because she is old she cant run a scam, in many ways it can be easier because the 'gentle old lady' surely wouldn't do anything wrong :) I remember someone telling me that they rented their place to an old lady, partly or fully furnihed i cant...

I would let the insurance company investigate and not worry too much. I think the crucial piece of information that you have there is that the tenant signed a stat dec stating he knows nothing of the lady. I would be concerned if they were in cahoots (love that word) but as he has said...