"I can't be certain, but I think this is a load of BS."

As an ex-flying club owner, I can tell you it's not BS. Flight school insurance only covers "employees" and only covers instruction in their aircraft done by "employees". Insurance has been written this way for years as a way to limit their liability. A true flying club would most likely have a policy allowing a CFI to do a checkout and instruct in the club aircraft.

As cheap as training aircraft have become, and as rental prices have stayed the same, the guy might want to consider buying a plane if he thinks flying will be a long term thing for him.