Your insurer is being lazy. Ask them to provide all the details of any correspondence from the bus company. You may need to do a "subject access data request" to obtain it if they're awkward about it. Pay particular attention to the date of repairs that would have been required to the bus, and get your insurance company to ask why it took so long to get the bus repaired. They then need to ask the bus company if the vehicle had been involved in any other incidents after the alleged damage that you caused, as you caused no damage and believe this to be a 'vexatious' claim. Say that you 'insist' that they pay it. Your insurer has every option to not pay. They're just choosing not too as it would cost them too much to defend, but that's what you pay them for.

If you have protected no claims, then you are allowed to make two claims in any three year underwritten period before it affects your No Claims Bonus. If you don't have protected no claims, you will loose a percentage of no claims and will now be seen as additional risk, so it will increase your premium. Your legal cover will very doubtfully cover this, but by all means give it a go, as it does depend on the policy. I would certainly fight it and force your insurance company into doing so.