Even if you believe that paperwork breaches shouldn't form the basis for denying payment, surely you still have to draw the line somewhere? Would you be happy to pay a much bigger premium so that the insurance pays out even for accidents like the Solihull crash where there were numerous airworthiness and licencing lapses?
I think that if at the time of the accident, the aeroplane is airworthy and the pilot licensed and holds a medical certificate then they should pay out and that insurance companies should discount any paperwork irregularity
that has no bearing on the accident.
For example lets say someone fitted a new transponder without the correct paperwork, and this was uncovered by the AAIB during their investigation. As this had no bearing on the accident (as determined by the AAIB) then the insurance company should not be allowed to use this as an excuse not to pay out.
Otherwise this gives them unlimited scope to not pay out. What would happen say if some hypothetical person went for their medical renewal and forgot to mention that 6 months ago they were ill in hospital with pnumonia (for example - assume it is something that kept them ill for a month). During the time they were ill they didn't fly, yet should probably have declared this to the CAA, and should certainly have declared it on the medical renewal form...but they didn't.
Subsequently 6 months after the medical renewal they go and crash and cause a lot of damage and kill a few people, due to something unrelated. Could the insurance company use their episode 12 months ago as an excuse not to pay out? How deeply would they dig? I assume they would have access to medical records.
It is all very well saying "we should keep our documents in order" and I agree as far as possible, but I reckon that in the past 10 years I have probably been to see the GP for something like an ear infection, he has given me antibiotics, then I have totally forgotten to mention this at the medical renewal. It doesn't seem a big deal but if it can lead to invalid insurance, it could be a massive deal.