to help you with your decision, ask yourself how you are going to
feel if -knowing what you know- he takes some kids out for an
afternoon sail and they are all lost...if you are competent to judge
the condition of the boat, and he has asked for your opinion...give
it to him in clear and unvarnished terms

Tell him he should insure it. That should sort things out, unless your US
insurers don't look for a survey?

And don't most marina's require proof of current insurance for the vessel?
Can't see an insurer offering a policy on that disaster.