Go after the vehicle owner in Small Claims Court
I'd recommend you check the rules regarding going to small claims court in your state. I've been researching this due to my own case. Remember that you have time to research these matters and come to a conclusion. Check the statute of limitations, but you should have a minimum of two years from the time you made your claim to take legal action if you can't settle with the insurance co. on property damage and usually longer for any medical conditions. Laws vary by state so make sure you check them. Also, you have two seperate claims you could pursue: the phyical damage and repairs to your vehicle would be one and any injuries would be another. Obviously a lawyer would probably combine them to get you a bigger award if the damages or injuries were severe, but may not be an option if your not seeking a large settlement. If I am correct, you would go after the vehicle owner in small claims not the insurance company. Obviously, if the owner receives a summons to court he's going to call the insurance company screaming and threatining to sue them for not covering them.
Do your homework and research. I'd go to the library or buy some books on small claims court and also settling a claim. I bought some off a website called NOLO. Not ultra in-depth but they do contain some good info for anyone not that well versed in this whole legal mess.
First, I'd resend your demand letter and state since they did not contact you in the time you stated that you are now going to pursue any legal alternatives available to you including small claims court. Also, state that there will be no more communication from you to them on this matter until you take whatever legal action you decide or they want to offer you a settlement. Also, write that all their responses to you must be in writing on company letterhead with the appropriate adjusters name and signature and sent via US Mail. From what I read, that panics some adjusters because it traps them if they are doing anything unethical and may come back to haunt the insurance company in court. You will want to add in a copy of the police report and any witness statements if you have them. A Demand Letter is basically your way of saying that informal negotiating and talking are at an end.
Stay courteous and polite. Good luck, hope this helps a little.