By doing that you are admitting to causing the damage BUT that you are unwilling to PAY for any more then $400 worth. I wouldnt give her a dime, she got over on you.
Now here is what you MUST do. Write some type of contract that says by accepting the $400 she CANNOT look for more damages in the future and by accepting the $400 the issue is closed and cannot be re-opened.
(may not stand in court, but well worth having it on paper).
Remember though, any liability is liability and by paying $400 its basically admitting liability. (IMO not a lawyer, just an insurance agent..)