Auto Insurance Claims: car accident, insurance commissioner, liability claim

Question
My Husband was driving the company vehicle and while backing up in a parking lot another fella moved forward and the tapped each other.  There was nothing wrong with the company truck.  But the other fella had a half inch crack in the front fender of his car.  
 They exchanged insurance information but did not make a police report.  Without a police report the insurance company will not pay for the damages and now the other party wants 1000.00 cash from us.  Can he take us to court for the crack in his fender without any proof.  

Answer
You will need to check with the insurance commissioner's office in your state regarding the specific laws, but I'm not aware of any insurance policy that can deny a liability claim for not having a police report.
The exception would be if an accident did occur, was not reported in a timely manner and "additionally", there were no police report.  In a case where the insurance company has loss their right to conduct an investigation because there is no documentation and the vehicles have already been repaired, they can deny liability coverage. We are all required to report all accidents in a timely manner for this very reason.  
As you haven't specified the time frames, I don't know if this has anything to do with their decision.  I'm also unsure of who's actually responsible as you didn't specify if your husband is an employee or company owner.   The owner of the vehicle and/or their insurance company bears first responsibility to the claimant.  

Someone can take you to court for anything.  Whether they will prevail or not, I do not know.  However, if your husband did damage the person's vehicle, then why would he need to be taken to court to make things right?  It doesn't sound like there is any dispute of the facts.  Whoever is backing up bears 100 of the liability if they back into someone.  Vehicles that are moving forward cannot be held responsible for running into vehicles that are backing toward them.  Once 3,000 of metal is moving in one direction, it's not going to start going in the opposite direction to avoid a collision with a vehicle backing towards it.

Like I state in my profile, none of my answers have ever been proven as wrong, though they may not be the answer that you are looking for.

I wish you luck.