You are confusing two different issues.
1). The contractor saying, "Don't worry." is a cavalier attitude and is scary. You'll get no argument from me that the guy behaved badly after shorting the wire, it certainly is not professional behavior, and a reasonable person should definitely be concerned in such an event. 2). The wire being in an unusual location is a "latent and concealed condition". The Owner did not know about it, the contractor did not know about it. It is the Owner's house.Look at it another way. This is how it _should_ have worked. The contractor is legit, and the homeowner has a signed contract. The contract has the standard latent and concealed condition clause. The contractor hits the wire and it shorts out. The contractor stops work and informs the Owner. The Owner calls in an electrician to open the wall and fix the wire. You can't have a concealed electrical junction box, and the wire won't magically grow a foot so you can cut it and have the required wire length inside the box anyway, so rewiring is in order (unless everybody is cutting corners). The contractor would charge the Owner for the delay, unless he's in a good mood or has other things to work on, and for patching the wall/ceiling the electrician opened up. Then it's back to installing trim.
That is contracting and that is the textbook way it should work. Obviously it doesn't always work that way on smaller jobs, with unlicensed/hack contractors and without contracts. It does not change the fact that the Owner is on the hook for something the contractor would not reasonably expect to encounter. Since code requires wiring to be a certain distance back from the face of the framing, any typical nail used in attaching trim shouldn't have been long enough to reach the wire if it were in the correct location.
I don't know if you should be fanning the flames of paranoia with an already admitted spooked homeowner. They should be concerned, and they should get it corrected sooner rather than later, but there's little benefit in talking about deadly situations.
The OP mentioned getting a guy in to help with the trim. I am using the word contractor, though he may not be anything more than an unlicensed handyman, or a "skilled" neighbor. There are few homeowners who are totally oblivious to licensing issues. The decision to hire a guy without checking on their qualifications, licensing and insurance is usually made based on the guy's price being good, he's available, and, hell, what could go wrong with putting up a little trim? There's not a lot of liability like he'd fall off the roof, right? This situation should help clarify the error of such thinking.
About the comment of using a stud finder as a foolproof method of finding wires, and scanning everywhere before nailing. As Roger mentioned, there's a top plate running along the wall, and there are (toe)nails attaching the stud to the plate. Nobody except a blithering idiot would run a wire in a location that would require them to drill through the (toe)nails. More likely the wire was either set into notches, or just draped or stapled up in the soffit.
R