Under the Civil Aviation Act there is a strict liabilty in law on the aircraft owners, regardless of PIC. If insurance cover is inadequate then all joint owners remain liable. This is the major advantage of groups incorporated as limited liability companies.
As for other matters, arranging and maintaining insurance cover is usually the responsibilty of one particular group member (in my own group it is me) If that particular individual forgets or neglects to renew or maintain insurance cover , you may never know about it and yet under a literal interpretation of the clause you quote you would still be liable.