Thank you so much. I think what I will do (to piece together a little bit of everyone's wonderful advice) is go to her with a piece of paper full of many detailed questions and a smile on my face. This way I am letting her be heard. I am also collecting and documenting details. And at the same time I am showing that it is not so easy to just "slip and get paid" - there is a process.
I collect all this information. Then I come back the next day and ask her to send a letter (certified mail) describing the answers to the same questions - and this will provide me with any discrepencies if her memory fails her.
Then I will say thank you very much for the info, I will process this and get back to you on what we can do.
Of course in reality I am just running her around and getting her to question herself. I will in reality get back to her saying that I can't pay anything but the insurance company will be able to review the details of her case if she would like. I will also have a calm and heart felt talk with her at that time (brief) that I am a good honest person and there is such a thing as karma. If she wants to be litigious - taking advantage of this and that - I could also "trip onto her old Honda." that is parked inappropriately on the grass - maybe . And let her take it from there.