Beach, despite about 100 posts suggesting you get a lawyer, you still don't have one. A "shared" lawyer with the family of the injured party is like sharing your lunch with a shark assuming it won't eat you when it gets hungry again. Probably, one day in the near future, you will get a phone call from that lawyer saying that he can no longer represent you because of a conflict of interest. Five minutes later, someone will show up at your door serving papers.
There are three potentially liable primary parties here; you, the kid and kid's parents and the other boater. The potential also exists for the PWC and boat manufacturers to get called in as well. Each of you has different interests, regardless of how close you may be to the kid's parents.
The very first thing you need to do is to find out why your insurance company is denying coverage. If, in fact, they are going to walk away, you are in danger of losing everything you own and may own in the future.
The second thing you need to do is find an attorney of your own. as stated several dozen times here.
I am missing some info here, like when this happened. It takes no more than a couple of weeks to process a blood test. The BOC of the other driver should be public info at this time.