Unfortunately, there are many opportunists who seek to take advantage of the bad luck of others.
Was the new retaining wall installed by a licensed contractor? What specifically is she unwilling to cooperate about?
There is no legal obligation in the State of California for one land owner to produce insurance information to another land owner, even if the other owner has a meritorious claim for damages. If you are served with a formal claim, you may tender it to your insurance company at that time. Until then, based on the facts in your description, I would ignore the request to provide insurance information.
However, I would ask to have an independent third-party inspection of the alleged damage on the neighbor's property. Enlist the services of an experienced, licensed engineer and perhaps a landscape contractor. Ideally, these professionals would be retained by an attorney acting on your behalf. in that case, if their opinions were adverse to your position, they could be protected from disclosure under the attorney work product doctrine.
To manage the risk, I would err on the side of repairing anything that arguably resulted from this event. If many months have passed since this occurred, it may be unlikely that she will sue. Unless she has significant repair costs, she will be unable to find a skillful and experienced litigator to handle the matter on a contingent-fee basis. In other words, she would have to pay hourly fees. Some well-to-do landowners with too much time and lots of money will sue for the sport of it. Having done no improvements in 35 years, that does not seem to be the case here.
In the event she does sue, your homeowners insurance may provide a defense but your premiums may increase or your policy could get canceled if the insurance company believes the risk of further coverage is excessive. As a general rule, the amount she could recover would be based on the cost of repair, prejudgment interest, and any other sums required to "make her whole." In most cases, attorneys fees are not recoverable unless the parties are in a homeowners association. Each case is different, and this is not a legal review. These comments are provided for general informational purposes only. Consult a licensed attorney regarding your rights.
Edward H. Cross
Neighbor disputes can often be the worst. I sympathize with you. Before I did anything else, I would try to talk with her to find out what her issues are. Maybe it's a simple fix. Often asking someone what they want or what would make the matter better for them will give you surprising results and answers. Because she seems to go back on her word, "She wanted it filled with concrete. So I agreed." See if you can get her to write it down for you. Because she seems to be unstable, I probably wouldn't give her a "written contract," as much as seek a letter from her telling you that she will accept "X and Y" as a resolution of the problem.
If that is unsuccessful, tell your insurer that there may be an issue. At least they will have notice, you have to read your insurance policy to determine what the proper notice is, but, just advising them won't hurt. They will start a file on it and maybe see if they can resolve it (I can't really guess since I don't know who your insurer is). If there is an issue raised by your neighbor, they will probably try to resolve it prior to suit being filed. If she files a lawsuit, your policy likely will provide not only coverage for the claim, but the costs of defense. Unless you want a particular attorney to represent you, they will just provide the lawyer.
A side method to resolving disputes like this is to see if there is a local mediation center. Frequently, places like this can resolve things like this, the often handle noisy neighbors, barking dogs, etc. Perhaps there is one in your community.
As counsel suggests, neighbor disputes can become quite nasty. There is no reason at all to give her your insurance information. Retaining walls can be very important and could give rise to damages claims if indeed your construction/improvements damaged her property and its support, etc. I would not suggest notifying your insurer just yet as no complaint has been filed and unfortunately you want to be cautious when dealing with insurance. Seek a consultation with a local attorney to set up a plan to deal with this matter and hopefully quash it before it can get to the courts. Good luck
These answers are not intended nor shall it be deemed to be the rendering of legal advise, they are given based on the information provided which is insufficient to give meaningful advise. These answers shall not be construed as part of the creation of an attorney-client relationship, nor shall it impose an obligation on the part of the attorney to respond to further inquiry. The Questioner has responsibility of obtaining legal advise from an attorney and is urged to do so.