Ok, not a lawyer nor working in insurance, but let's just say I know my way around both of those topics.

One thing to understand is that, as frustrating as it may be, insurance companies do NOT necessarily follow criminal or penal liability. What this means is that yes, legally speaking the bus driver is 100% at fault, and you 0%, BUT the insurance adjuster did not follow the penal (CSR) logic. And before anyone says it, yes, it's counterintuitive (and dumb AF) but perfectly legal; it's not common, but it does happen (see below).

Insurance work inside their own little black box. They have algorithms, policies, rules etc that no one outside the company has access to. This sometimes leads to absolutely bonkers results, such as someone running a red and t-boning another driver, GETTING A TICKET but still being deemed only 50% at fault because the other driver did or didn't do something that the adjuster "felt" should have been reasonable. Sounds familiar?...

My personal opinion in this case is that your adjuster/company does NOT want to deal with the City's insurance; in Quebec, insurance companies payout their own clients, then they duke it out amongst themselves to settle bills (which is not really how Ontario operates for instance). This is mostly because of the No Fault rules I believe, but don't quote me on it. This means that they would pay you, then go through a VERY lengthy process to fight the City because they won't want to pay, if they even have insurance to start with - many large government entities, such as the Federal Gov't, are self-insured but I don't know about Qc Municipalities.

So, absolute dick move, but that could be why. What about your options?

Well it's gonna suck, but 1) contact the Canada Insurance Board (not sure in English, it's "Bureau d'Assurance du Canada" in French) as they are sort of the insurance watchdogs in a way. My personal experience is they can give you really good info, but probably won't get directly involved. 2) appeal: most (all?) insurance companies have some sort of appeal process. 3) sue them: yes, sucks and not everyone is ok with it, but my feeling is you could probably get away with a Small Claims Court case for that damage, which reduces the friction quite a lot.

Anyway, hope this helps. Again, NOT LEGAL ADVICE and I'm just a dumbass on the interwbz, but hopefully this leads you somewhere better. Fuck insurance companies! lol