I work for a P&C insurance company, so I have more more relevant knowledge than... A plumber? A clown? I dunno. I have some.
The $500 offer is not unusual. This is their way of saying, "you don't seem hurt, and we'd like to close this now. If you'd accept $500 for potential future minor medical treatment, we can close your claim."
If you accept their offer you're done, and any future treatment she has related to the claim would likely NOT be covered.
If you decline, they will be forced to keep the claim open for up to three years I believe (since it's bodily injury) but if your wife never has relevant medical expenses, you'll get nothing. They'll be motivated to close it rather than letting it linger indefinitely for three years, so they might offer more in time or you may be successful in asking for more. Especially with that other dick head bending them over, if you said, "I don't know that she'll need treatment, but if she does it'll probably end up costing more than $500. We would accept $1,500 for potential future medical expenses to close the claim. Otherwise I'd like to wait to see how she feels over the next year," maybe they'd be thrilled to close one aspect of this.
And I wouldn't think less of anyone offering a deal like that - you really don't know what might come up. $1,500 could cover out of pocket costs for some care that, while unlikely, is certainly possible.
My wife was in a very similar situation some years ago and got the exact same offer. They paid her ER bill and offered $500. Her injuries were very minor, and she never needed any additional care. If after a couple weeks, or months, your wife feels fine, she's likely fine. But ya never know, y'know?