It can often be exactly the two-fold reason she gave you. Even if they do see you, motorists often underestimate the speed of cyclists, so regardless of how many lights and reflective items you have, we're still susceptible to left and right hooks just like you experienced. Even more so when descending.

It sounds like it was completely her fault and I hope you get everything covered by her insurance and the police were there to make a report.

That said, it also sounds like you could use more lights. Reflective stuff only gets you so far. What sort of lights were you using? I ride in Seattle and the setup I've settled on is at least two Superflashes on my rear (one on my saddle bag, one on my messenger bag, both very visible and not hiding behind other crap), usually three when it's actually dark, but one of the lights I keep on my bag is old and funky. I keep one of the lights on my bag on solid and one on flash, and the one on my saddle bag on flash. Side visibility is an issue as no one sells good, simple, amber lights for bicycles, but I pretty much rely on my big see-stuff light to give me side visibility at night. That seems to work well.