Originally Posted by benjamin
What you should understand is that you aren't going to be sued personally. One way to handle this is to file a claim against your auto insurance company or your umbrella insurance (you're a homeowner, aren't you?). If the insurance company fails to adequately compensate the kid's parents, they'll be able to sue the insurance company. You personally shouldn't be sued. If your wife's family thinks they want to sue you personally, they're stupid assholes.
(Note: I am not a lawyer, or a law student, or a paralegal, etc.)
They do sue you personally; the insurance just covers the judgment to the extent that you have coverage. You are still liable for any portion of the judgment in excess of your coverage.
If you have a minimum limits policy, you could quickly have a judgment exceed your coverage.
However, you probably don't need to worry about a lawsuit until you are served with the papers. Once (and if) you are served, call your auto insurance company and tell them and get the Complaint to the insurance company. They will have a lawyer defend the claim. You will want to assert some influence over the case to make sure it settles under your policy limits. You might want to hire an your own attorney to pursue your personal interest as the insurance company is generally more concerned with their own interest.
Also, having worked as a legal assistant for a year or so, I don't think I'd be so quick to judge what a jury will or won't do unless I had serious experience with the jury pool of that area or had conducted a focus group. Jurors don't like to see injured Plaintiffs, especially kids, and will reward verdicts that don't have anything to do with what actually happened and it is hard to get a judge to grant Judgment N.O.V or get a case overturned on appeal.
DISCLAIMER: I AM A LAW STUDENT AND WAS A LEGAL ASSISTANT, BUT I AM NOT A LAWYER AND THE ABOVE DOES NOT CONSTITUTE LEGAL ADVICE.