No, not an insurance thing. NVFR is preferred for precisely the example you gave. Pilot's pay isn't necessarily relevent to whether or not the flight is considered a charter. It's possible, for example, for a private pilot to be paid quite legally under certain circumstances. Charter et. al. is defined in the CARs and unless the aircraft fits in one of the categories mentioned then it is not a charter flight.
Last edited by Tinstaafl; 6th Dec 2008 at 02:56.