Legal Requirement
By law, in the UK, it is a requirement for all motorists to be insured, so that you have a policy to cover you liability to other road users. This includes injury to others and damage to property. It is an offence to drive your car or allow others to drive it without insurance, and you can be fined and/or sent to prison for failure on producing a valid insurance certificate. This has been law since 1930, and was updated in the Road Traffic Act 1988. Also in order to get you car taxed, the post office will want to see your insurance certificate and MOT before they issue the car tax to you.
Need To Pay For Car Repairs
You are not forced to buy insurance for other property that you own, like your house or personal items. Also if you do have an accident, there are no medical expenses to pay since it is all free on the NHS. So the only risk appears to be the financial loss in repairs or replacement of vehicles.
However, consider the scenario where you accidentally drive into another car without insurance. Since it is your fault, you are liable, you will have to pay for the cost of repair to the other drivers car, or even replacement. If your car is a cheap run-around, and you crash into an expensive luxury car, it can be a financial nightmare in terms of repair bills.
Additional Costs in an Accident
Even if you can afford the repair costs, there are other costs to consider. For example, if the other party is injured, you will not have to worry about medical bills, but the NHS will not pay for the loss in earnings if the other driver cannot return to work immediately. So if injured driver takes you to court and asks for injury compensation, they can force you to reimburse their wage loss.
The court case itself is another source of financial headache. If you can successful prove that it was not your fault, then the losing party will have to pay for your legal fees. However, if you lose, you are burdened with solicitor fees for both you and your opponents, which can easily spiral up into a long drawn out case. Remember, that the other party will have insurance, whose legal fees are paid by the insurer, so even if a case takes weeks and months, it will not be an issue for them.
Even if you Drive Safely
You may consider yourself to be a safe and careful driver and will not be the cause an accident, but there are many ways where an accident can occur where you may not be the obvious guilty party. Examples may be bad road conditions such as icy road, avoidance of pedestrians or animals causing you to crash into another car. But by law you may be liable, and once again you are faced with legal costs trying you prove your innocence. Trying to avoid obstacles may also result you crashing into buildings, and the cost of repairing structural damage, usually far exceed car repair costs.
So not only is your car insurance certificate is a very important legal document, it helps protect motorists and drivers against the financial consequences of having a car accident that they may have caused.