Sue Ins Co. or Body Shop, or both?

New York State.
I'll give you the short version, as well as I can.
My car got hit front fender(July 01), directly over where the air suspension sysytem components are located. I made note of this at estimates and with adjuster. The system worked perfectly before the accident After the accident the components Made a lot of noise, but still worked. This was mentioned to ins co and body shop many times. That was left as "Open Claim"
Due to 9/11 and delays with parts, my car went in for repair on 11/12. It's been moved twice since about 12/3- without my authorization. It is now at a repair shop allegedly qualified to make repairs.
The Insurance company has "denied" my claim twice. The battle rages on.
I know the parts worked before the accident, and partially worked before the repair. Now it doesn't work at all. It has no suspension. I can't drive the vehicle.

The body shop has suggested I sue the guy that hit me. I'm more inclined to sue the body shop, and/or the insurance company.

Two questions;

1) Should I now go after the body shop , and expect them to drag the insurance company in? (Or should I stay after the insurance company)?

2) Since I have not seen the actual body work yet, and am contemplating legal action, should I pay the body shop for the original "repair"?

HELP!