What is common here, in the handy crowd at least, is to do your own electrical, plumbing, gas work and leave it open and accessable for a licenced professional to check and sign off on.

You're still paying for an hour or two of their time and a surcharge for "taking on the responsibility" but it's often not an issue if the work is clean, to current code, and sanity tests correct (correct wiring, correct angles on plumbing, pressure testing on gas pipes).

_This_ is the claim that is extraordinary. I'm not saying that the government would bust down my door for doing work on my own home, but rather that the insurance company would then view that work as uninsured.

The entire business model of insurance agencies is to find new, creative, and unexpected ways to deny claims. That is how they make their money. To claim that they would accept liability for a property that's had uninspected work done by an unlicensed, untrained, unregistered individual is just that - extraordinary.