as an employed instructor you should be covered for your third party and legal liabilities through the club or school insurance. What you are not covered for is your own personal injury or death. It is normal for crew to be excluded from an aviation policy so what you need to cover yourself for is personal injury. It might be worth getting a "critical injury policy" which are readily available through many companies. For a monthly fee you can get cover which will pay out a lump sum if you get ill or injured and cannot work for a few months.
If you are self employed you may find you are not covered automatically for legal liabilities so insist that the club includes you in their policy before you start working for them, as it is hard to find this kind of cover on an individiual basis.