You're right. An insurance company isn't going to issue a card to someone without a current drivers' license.
However, the last time I checked, the insurance company doesn't come to your home to repossess your insurance cards when your license is suspended. So you could have insurance cards and no license. Nor do they come take your insurance card if you've failed to make the payments on your policy.
You've also been quite lucky if you've never been presented with an invalid insurance card after a fender-bender or accident. Of course, a twice-convicted pot smoker who was caught driving with a suspended license would never think of working in the grey area.
The police kicked this to a grand jury because there were so many questions. Let's wait until the facts come in before we wet the sponges and strap her in the chair.
They may both have had invalid insurance cards which would explain the heightened tensions. The Grand Jury is a good place for it.