I'm not a lawyer by any stretch, but I would recommend you and your family member speak with an attorney in your area. If I'm not mistaken, each state has its own laws concerning child daycare facilities. In some states, for example, I know it's legal to run a non-licensed daycare depending on the number of children you're watching. In others, I would assume unlicensed and uninsured daycare operators could face serious legal trouble.
Perhaps your family member should be more worried about liability than you since they're running a non-licensed, non-insured daycare out of their house. I would think your liability in case of an accident would depend on the capacity in which you're present at your friend's daycare facility. What I mean is, being a visitor who doesn't interact with the kids can be entirely different than being directly involved in their care. Like I said, your liability as a visitor/helper could be affected by the state in which you live.
A lawyer would be the best possible resource for answers, but for now I hope this link about the regulations for uninsured daycares in New Jersey provides a little clarity: (removed)
This link provides state-by-state information on child daycare licensing: (removed)