CF,
I beleive that if you have documented evidence of what you told the owner and he declares differently you will be covered in law and not liable to the insurance company. However the aircraft and you will not be insured. You will be the captain of the aircraft and it is you who are legally responsible that the aircraft you are flying is legally compliant for the airspace in which you are operating.
I advise my corporate clients to take insurance through Hayward Aviation as their policy includes pilot liability protection, which you will not find elsewhere.
Take care and never trust anyone in this type of operation, , there are good guys out there but check for yourself and make sure you are flying happy and safe.
MM