It really depends on what your state's laws are regarding this, but in some states the other guy can go after either the driver's policy or the car owner's policy. So in your case, since the driver has no insurance, your policy could possibly be utilized to cover the damages. This is an excellent question to ask your insurance company, they would know exactly what's the deal.

I think it is best you be straight forward with your insurance, there's no sense in trying to hide it and they will also eventually find out, which would make matter worse. One thing you need to discuss with your girlfriend and figure out is, if you are going to tell your insurance whether or not her brother was authorized by you to use the vehicle, this will probably make a big difference on whether or not you are penalized for this incident.

I hope you are able to resolve this matter quickly and painlessly, good luck!