diff --git a/src/types/settings.test.ts b/src/types/settings.test.ts
new file mode 100644
index 0000000..5790425
--- /dev/null
+++ b/src/types/settings.test.ts
@@ -0,0 +1,22 @@
+import { parseSmartCopilotSettings } from './settings'
+
+describe('parseSmartCopilotSettings', () => {
+  it('should return default values for empty input', () => {
+    const result = parseSmartCopilotSettings({})
+    expect(result).toEqual({
+      openAIApiKey: '',
+      groqApiKey: '',
+      anthropicApiKey: '',
+      ollamaBaseUrl: '',
+      chatModel: 'claude-3-5-sonnet-latest',
+      applyModel: 'gpt-4o-mini',
+      embeddingModel: 'text-embedding-3-small',
+      ragOptions: {
+        chunkSize: 1000,
+        thresholdTokens: 8192,
+        minSimilarity: 0.0,
+        limit: 10,
+      },
+    })
+  })
+})
diff --git a/src/types/settings.ts b/src/types/settings.ts
index 4f959b5..b774af3 100644
--- a/src/types/settings.ts
+++ b/src/types/settings.ts
@@ -16,6 +16,7 @@ const embeddingModelSchema = z.enum(
   EMBEDDING_MODEL_OPTIONS.map((opt) => opt.value) as [string, ...string[]],
 )
 
+// Update settings.test.ts after changing this schema
 const smartCopilotSettingsSchema = z.object({
   openAIApiKey: z.string().catch(''),
   groqApiKey: z.string().catch(''),