Doesn't matter if the PIC is handling or not its still there problem.
As for the insurance side of things, just go and ask them
I have and also know several groups that also have. Also had it in writing as well that they are insured for it with none instructors. With PPL PIC and other handling the controls.
I was for a period a checker for a group with no valid SEP. Couldn't quite work that one out either. But insurance broker was happy to list me as one and the person flew as PIC and was inside 90 days.