The insurance company is giving you BS. They already know who the lady is and have probably already called her to ask about the collision.

I would pay the LBS the $240 and get back riding. Call the insurance company and tell them they have one chance only to settle for the full amount or you will file suit. Claim your helmet (if wearing one as well) you should not wear a helmet again that has been in a collision. Claim any clothing that may have any damage, no matter how small.

If the insurance company still plays games, call the lady and give her one more chance to pay for everything and let her know that if you sue her, she will likely end up paying court cost as well (depending on local laws).

At that point, if you do not have the money in hand, take her to small claims court.

Take notes of every phone call, get the police report, take photos and the repair bill to court with you.

Good luck

PS: I would have demanded a new bike.