UK car insurance became compulsory by law in 1930, when the authorities realised that a central pot of money was needed to pay out to innocent victims of car accidents. As the level of liability for causing an accident remains unlimited, you need lots of people to put their premiums into a big pot so that money can flow from the fortunate to the unfortunate when they have an accident. Since the early days, car insurance in the UK has developed into a complex business, but the key principle still remains true: If you drive a car in the UK, car insurance is compulsory.
Firstly, without UK car insurance, you won't be able to get road tax. New Police technology means that patrol cars are able to tell if a car passing them has no road tax and it is now within their powers to impound your car and crush it, if you are driving without road tax or insurance. DVLA: What if you don't tax or make a SORN
Secondly, if you have a crash without UK car insurance, as well as being in trouble with the law, you will have to find money to pay for the damage to your car, anyone else's car involved in the accident, compensation for injuries and of course any other property that may have been damaged. This could be very costly!
Thirdly, like any other form of insurance, car insurance in the UK is there in case the unexpected happens. Accidents are never deliberate. No-one means for them to happen but they do. That's chance. If the unexpected does happen, insurance can help to put both the driver and anyone else involved in the accident back into the same financial position as if the accident hadn't happened.