LDW is what covers the damage to the vehicle, the other insurance options are for 3rd party liability and personal injury/belongings. If you didn't purchase LDW you are responsible for the damage to your vehicle, unless your employer's AWD number includes free LDW on business rentals, which is why you'll have to prove you were on business when you've already (albeit accidentally) claimed otherwise. You probably won't need a lawyer to do this, your corporate travel department should suffice, especially if they have a good relationship with their Avis sales rep.

FWIW, the bulk of your $800 bill is likely the "loss of use" fee to cover the time that the car wasn't available for Avis to rent because it was being repaired. You might be able to get the loss of use fees lowered if you ask to see utilization and revenue per day numbers that support the amount of the fee, but the amount you'd probably have to pay to retain a lawyer to push Avis on this would likely exceed whatever savings you might realize. The moral victory might be worth it, however