I have been told by various insurance people here in the UK that they won't pay out if the flight was illegal to start with e.g. no CofA, no/expired pilot license, medical, etc.
Yes, Graham Hill is a well known example of a non-payout following a void CofA. According to several accident books which discuss his accident, the aircraft had been de-registered from N but nobody noticed. I have never found anybody who knows the details but I suspect that somebody did an Export CofA on it and this is known for causing the FAA to assume it has been exported from the US reg, and strike it off.
The grey area is how far the insurers dig. Every 747 landing at LHR this moment is technically unairworthy, in that there will be a washer or a light bulb somewhere which was fitted without the correct traceability data entered in the work pack. The old joke is that bulbs on AOC aircraft last for ever, because nobody can be bothered to do the paperwork for them. In GA terms, if you dismantled a plane and noted the serial numbers of every item (incl. avionics) and traced it all the way back, you would find that bits were changed without being logged. And of course most of today's 30 year old planes don't have the full logs back to Day 1 anyway. I have never seen evidence that insurers look for that kind of stuff, but I suppose in theory they could.
However
KNOW FOR CERTAIN that an insurance company has not paid out to a victim in an accident?
is a different question because that asks about passenger liability. The pilot is obviously dead. I have no idea what the law is where this plane crashed. In the UK,
negligence needs to be demonstrated for passenger liability to kick in, AIUI.