Question about insurance from a European exchange student in

Hello ! I am an exchange student on F1 Visa in California and am having big problems with the DMV to to an incident that happened to me. Let me explain further : I am a student without a car (I ride bike to Uni and do all my stuff with bike) but decided to buy a car soon. I got my california license easily and prepared to save to buy a car. However in the meantime a neighbor proposed me to lend me his car because he had pity to see me bike everywhere for groceries. Remember I am 19 and HAVE NO IDEA ABOUT THE LAWS IN CALIFORNIA and NOBODY INFORMED ME OF ANYTHING. I accepted and drove the car to the supermarket. However one day I parked too close to one car and scratched a little bit of paint off the car (a red medium priced convertible). I discussed with the driver and told him I would pay him cash whatever he needed. I did not report the incident because I HAD NO IDEA I JHAD TO (we often settle like that in GERMANY ). However soon (1 month after)the DMV calls me and tells me to fill out a financial responsibility form for damages OVER 750 DOLLARS. I talked to the neighbor and he just said : andquot;oh my insurance doesnt cover you, work it our yourselfandquot;. (i cannt say if his insurance does cover me or not). Anyway I never thought the damages were over 750 Dollars and sent a request for hearing disputing the damages which has been approved. However then I received a letter from the insurance of the other party requesting me to pay 800 DOLLARS ! I talked with my parents over in Europe and they said andquot;just pay itandquot; and so I did. The insurance told me they would send me a release form or something and then I would be able to keep my license. HOWEVER (and here is the PROBLEM) I talked to DMV because I thought andquot;why do I need the dispute form because now I paid everythingandquot; but DMV agents told me if I CANCEL MY DISPUTE HEARING then I will certainly lose my license ! So...What should I do from now on ? I didnt cancel the dispute but paid everything to paragon insurance. (By the way, the insurance told me what had been paid for and Im not a pro but I still think it was too expensive but am not 100 percent sure). I am an HONEST student from Germany and dont want to lose my license for 4 years or I dont know how many because of a SCRATCH in the parking lot !!!! PLEASE HELP ME !!!!! Niki