The guy has flat out refused to pay for vw body shop to repair if all else fails then it will have to be insurance.
Do you mean if it comes down to a bodyshop repair he will go through his insurance rather than his wallet, or he will outright refuse to cooperate for anything other than a smart repair and you're assuming you'll have to go through your insurance?
You've already done the hard part - admission of guillt. If it comes down to bodyshop then his insurance will have to sort it - at a place of your choosing.