A contractor damaged my neighbor's property, what do I do?

I am needing some advice in a small claims case. I recently hired a 3rd party contractor to come out and stain and seal my fence at my home. My neighbors have contacted me and said they have over spray all over their home, gutters, and cars. I did give the info of the business to my neighbor so they could work out the clean-up. My neighbor does not want to wait for the gentleman to come out and access the damage. She wants to take her cars in to be detailed. ($500) My neighbor called to make a police report and was told that I as the home owner would be responsible since I hired the contractor. I am not sure where to go from here.