In March 2012, a lady at my place of work accused me of scratching her car. I left work on the Monday as usual, and upon entering a room on the Tuesday, she accused my colleague of hitting her car in the staff car-park, he went onto explain that he doesn't even own a car or drive and she then moved onto accuse myself. I obviously denied all knowledge of this however to maintain a civil relationship I gave her my contact information. There was no damage or scratches on my car and I am 100% adamant that I did not touch her car. A quick glance at her car showed a few surface scratches here and there. Her car wasn't subsequently in the car park for the next week. She continued to bombard me with texts at all hours, one at 3am stating that she had got a quote and it was going to be at least £800 to repair etc. My contract at that place of work ended one week after the incident. My insurance got in touch, and I denied liability and also sent them a letter with full details and images of my car with perfect paintwork. My insurer's were dealing with it and at around December 2012, my insurers stated that they had no further contact with her insurer's, they hadn't provided any evidence despite numerous requests and they were going to give them 60 days to reply to the contact or they would close the case. No contact, case closed. Now, August 2013, a full seventeen months after her initial accusation and we just received a call from Direct Line stating that her insurers have started legal proceedings against us, and if we receive any documentation from them to forward it immediately. Despite not hitting her car, and I am now quite concerned. Do I have a reason to be? What are the main potential outcomes here? I can't see how they can produce any evidence when a)it didn't happen and b) they couldn't produce anything previously. I am not entirely sure on the legal proceeding's procedure and how my insurer's will react. Edit: I also forgot to mention that the car that I was driving at the time is also now long gone.