Going rate in our area seems to be $50. So here is a thought, instead of getting a re-instated CFI, he could instead earn is CFII to reinstate is CFI. That might be almost as much work and have the added benefit of something shiny and additional.
I would want to be named on his A/C insurance and also carry my own CFI insurance through Avemco (agree with above, watch for exclusions). There is a NAFI discount on Avemco.
Not sure where you are located, but an add on to what others said-- watch for location carve-outs in your insurance. Not sure where you are instructing but I saw an Alaska exclusion was added to my policy this year.