Sorry to hear of the issue.
You are a trader and as such you don't have consumer rights - the person you built the extension does have consumer rights. The law gives them strong protection if things go wrong.
You would be liable for breach of contract and breach of the consumer law, if the work was not carried out to a good standard of there are defects. There are two sides to a contract so just because the plaintiff is pursuing you, doesn't necessarily means they have a claim with merit or that they will win (or if they win, that they will recover 100% of the damages).
You say you have a solicitor and they would give you legal advice on this - we don't give legal advice as we are not a law firm.
We are an internet forum so we provide information and guidance from a legal standpoint in a Q&A format.
The plaintiff / your customer would need evidence of the defects which is usually from an independent expert - I am not sure why your insurer is not covering you. You may want to make a complaint to the insurer so that you can then ask the Financial Services Ombudsman to check if the insurer was correct to refuse cover - if the Ombudsman agrees with you, their decision is binding on the insurer so it could result in cover bring reinstated.
As for losing, if you have cash and assets then you could pay the plaintiff's claim - if you were unable to, they could pursue various forms of enforcement action though if you were unable to pay, you could speak to the Insolvency Service of Ireland as they could assist you further with that.