Everyone is jumping on how it's the owner's fault for not training their dog. We don't know the full story, and I honestly don't think it's important. The OP asked for advice on how to proceed. Me personally? I wouldn't like to keep something like this going on with the family who owned the dog. It's a lousy scenario but like others said, accidents happen. I believe a comp claim for me is $100. I would pay the deductible and get on with it.