Personally I have no idea why the Pilots Federation covers insurance of notorious criminals. It's the kind of thing that would very quickly get under scrutiny of the in-game entities.
Because of gameplay, fdev needed an excuse of why would you be able to keep your ship while paying a fraction of the cost.
If you really want to go the "realistic" way, we should be purchasing a ship insurance plan with the possibility of getting our insurance plan rejected because "the client crashed their ship in a 9G planet" one too many times and represents a financial risk to the company, then we would have to find a new insurance company and we would need to submit pictures from the front, back, sides, top and bottom of the ship, so the insurance company has a better idea of the state of the ship before the insurance policy, then we would need to submit the pilot's date of birth, pilot's flying license number, pilot's social security number to our insurance company of choosing alongside a risk assessment based on your activities and how often you end up going in a ball of flames, because if you know the rescue rangers on a first name basis, your insurance payments should be higher, because you are a financial risk to the insurance company, if they even take you at all and don't reject your policy request. Then when you get blown up, if you got a policy, you would need to file a ship insurance claim. When you file a claim with your insurer, you'll be asked to supply information and documentation related to the accident. Some information you may want to collect includes: Names, contact, insurance and ship information for anyone involved in the accident, location, galactic time and flight conditions of the accident (for example, if it was inside a nebula or a LaGrange cloud), photos of the ship damage, names and badge numbers of any officers that responded to the incident and a copy of the accident report. Another important part of the claims process is understanding your ship insurance policy and what it covers. When filing a ship insurance claim you will need to know your deductible. When you purchased ship insurance, you selected deductibles for certain coverages, such as collision or comprehensive coverage. Make sure you know how much your deductible is — it's the amount you'll have to pay out of pocket toward repairs to your ship before insurance coverage kicks in. You will also need to know your transportation expense coverage. If your ship insurance policy includes transportation expense coverage (sometimes known as rental reimbursement coverage), it may help pay for a rental ship or other forms of transportation while your ship is being repaired. Ask your insurer for details on how you'll be reimbursed, especially before you fly a rental ship off the shipyard. You should also confirm your policy's coverage limits (for example, your insurer may provide up to 30.000 credits per day for a rental ship for a certain period of time). You also would need to be aware of how long you have to submit a claim. It's a good idea to ask your insurer about time limits that may be in place for submitting a claim. That's because if you don't submit the claim and necessary documents within your insurer's time limit, you may not be eligible to receive any money to help with things like ship repairs or recue ranger bills. You should also keep in mind that deadlines for filing a claim may vary depending on the type of claim you're filing. Your insurance company will typically send an insurance adjuster to check your ship and see what was damaged during the accident and investigate the losses. This helps the adjuster determine who is at fault for the accident. They will also provide an initial estimate of how much repairs will cost. Some insurance companies may require you to get an estimate for repair costs. The repair stations you go to will typically inspect the damage and send a report to the insurance company. The insurance company will then take the repair shop's estimate into account when determining how much they'll pay toward your ship's repairs. You have the right to choose the station that makes your ship's repairs. You are also entitled to ask the station to use engineered parts to repair your ship instead of less expensive stock parts. Some insurers may also write ship insurance policies to not include engineered parts at all. In this case, if you want engineered parts, you may be responsible for the difference in cost between the parts in the adjuster's estimate and the engineered parts. When it comes to paying for ship repairs, your insurance company might pay the station directly or pay you and let you handle the bill. If your ship is destroyed in a covered accident, and you have comprehensive or destruction coverage, your insurer will pay you the actual value in credits of your ship (minus your deductible). Actual credits value is the depreciated value of your ship. You would then use this money toward the purchase of a new ship. If you owe more money on your ship than it's worth, gap insurance may help pay off your ship loan.
Also, believe it or not, insurance companies ensuring criminals happens in real life. Sometimes the company doesn't know. Imagine that on a galactic scale, how can the company Sagittarius A Star Insurances know that I blasted some settlers in Colonia? As I said before, insurance companies don't ask for criminal records and even then, is posible to have a bounty on a independent system and have the rest of the galaxy not even know about it or not even care about it. Also, the existence of anarchy systems make it possible to be a criminal without a criminal record and/or bounties. And even if I have bounties, the insurance company has to give me an opportunity, maybe I'm trying to turn my life around and live the life of an honest miner or maybe I'm here to cause a state of Infrastructure Failure on the system, who knows?
