Can you let us know more about the actual event you mention in your first post? I think many of us would like to know more, as the decision of the insurance company seems harsh/unreasonable unless there is more to the story?
As you can imagine it's an ongoing situation likely to involve lawyers and subrogation claims against individuals so I feel discretion is appropriate at present.
Knowing the impact this is having on friends I wanted to bring to a wider audience the fact that they may need to consider the financial risks they are taking if flying outside the cover laid down in their insurance - not to expose/identify the parties. It may be appropriate to identify the insurers when the dust has settled.