I've seen this a few times before. One question you need to ask. Who is PIC? If the instructor (or who ever yo are flying with) is, then why should you be held responsible for the damage. Its up to them to take the controls if you screw up. Thats why they are there. (oh I can see a few eye brows raised now) But seriously, it really is IMHO.
If you are hours building, then I see no problem. School charges X amount due to insurance rates but have an excess / deductable. In most cases, you either accept the risk or take your own additional cover for the excess. Maybe consider AOPA renters insurance as an option. Not done it myself, but have heard of it. Not sure how a recurrency check fits into this, but thats my two cents worth
IBR