It doesn't matter how your insurer thinks things appear, it is about the presentation of the facts. The other party still have to prove you're liable. The court would ask them to substantiate why they feel you are liable and they have to provide all their evidence to your solicitor/insurer's solicitor before attending court. If you are innocent, tell them to take you to court. You are free to do whatever you wish with your own vehicle, the court are not allowed to jump to conclusions as to why you would or would not have sold of it. Ask your insurers for a full statement from the other party as to how the alleged the incident occurred. Also ask them to provide the evidence they will seek to rely on in court. You then know where you stand.