if your insurance company won't insure because of paint, i would be looking for a different one.
Hagarty and I understand their point of view.
They don't want to insure a car that some would only consider daily driver material as it is specialty insurance. They would like to see before and after pics as proof the car is getting restored, I don't have a problem with that.
If the body shop stepped up as they promised it would be a non-issue and there would not even be a posting here. I have a few irons in the fire though and there might be an alternate in play.
To add to the fun I dragged home a rust free GLHS 2-dr today and a Rampage converted to turbo, the price was too good to pass up.