AFAIK any case submitted to an insurance co. can be referred to the ombudsman for arbritration, this is a very clear option for you. You need to find out about this immediately as well as have BMW insurance tell you in writing about the reasons that they will not pay out on the claim.
In the meantime start gathering evidence on how your father can clearly be interpreted to be the main driver of the car, write down journeys he regularly does and situations where he has been in the car that may be remembered by people. If he's paid for servicing or maintenance on a card then get that evidence and start compiling it. If he paid the deposit for the car (I think you said he did and then you pay the finance) then get evidence of this too, even if he transferred the money to you for you to pay the dealer you still need to get it.
Talk to a lawyer and see whether you should have been asked by the ins co. who's name the finance is in, IIRC all i ever get asked is who's the registered owner of the car - it's never about finance.
All of the above is simply what I would do in your situation and is not based on any legal experience but if you dont know what to do then at least make a start on that, and do it now!!!!
Keep your chin up buddy.