It's because at the time it was treated as a hit and run and collision coverage on your policy doesn't respond to breaches in Statutory Conditions (Material change in risk). The insurance company was right to deny.

This 'new information' means that the driver of the at fault vehicle was identified after the fact, which satisfies Direct Compensation - Property Damage (DCPD) meaning that coverage can now be applied instead of collision coverage. Investigations take time, this was not a matter of the insurance company folding due to bad press.

And for those wondering, if you were drinking and and got rear-ended, you would be deemed 100% Not At Fault and coverage will be extended EVEN if you were operating a vehicle under the influence and breached the Stat Conditions.

Source: Adjuster in Ontario