1. This is a tad crazy, all you have to do is declare SORN to avoid this, and that lasts a year and is free. It does not stop you taxing, insuring or driving the vehicle and there is no "un-SORN". You can do it on a web site. I bet it could be scripted even. So new law totally undermined by a once a year free web form. Why have the new law at all then?
2. Cars are not insured, people are, and there are plenty of cases where a car may be validly driven with the driver insured and not having the car listed on a specific policy. Police already make that a nightmare stopping you for no insurance when the driver may well be insured. Indeed most comprehensive policies allow driving someone else's vehicle with permission 3rd party.
So what the hell is the point in this?
P.S. To add to the fun! and not having read in detail yet, you can avoid the new requirement by SORN, but have someone other than the owner driving on their 3rd party clause still. When stopped by police they have to show now only the drivers 3rd part insurance, but to avoid a fine on a new law, the SORN as well even though clearly not at that point "off road"... That will be very silly and blow the mind of the copper I expect.
P.P.S reading this more, the P.S is not the case. But still trying to get a clear idea of what is actually required.
P.P.P.S thanks to Brian Widdas a break down...
Seems to me you can be exempt from new insurance requirement if the keeper keeps the vehicle off road and is complying with SORN regs (which only require a SORN when not taxed so easy to comply with if you have tax by doing nothing)
Ok, here we go... Section 22 of the Road Safety Act 2006 amends the Road Traffic Act 1988 (sections 144A-D): http://www.legislation.gov.uk/ukpga/1988/52/part/VI/crossheading/compulsory-insurance-or-security-against-thirdparty-risks 144A: Offence of keeping vehicle which does not meet insurance requirements If a motor vehicle registered under the Vehicle Excise and Registration Act 1994 does not meet the insurance requirements, the person in whose name the vehicle is registered is guilty of an offence. [etc] 144B: Exceptions to section 144A offence (5)The fourth condition is that— (a)the registered keeper is at the relevant time the person keeping the vehicle, (b)at the relevant time the vehicle is not used on a road or other public place, and (c)the registered keeper has by the relevant time complied with any requirements under subsection (7)(a) below that he is required to have complied with by the relevant or any earlier time. Subsection (7)(a) relates to the making of regulations. It is under this subsection that the The Motor Vehicles (Insurance Requirements) Regulations 2011 are made http://www.legislation.gov.uk/uksi/2011/20/contents/made 3. For the purposes of section 144B(5)(c) of the 1988 Act (the fourth condition), the registered keeper of the vehicle must, by the relevant time and in relation to that vehicle, have delivered the required particulars, and made the required declaration, in accordance with paragraph 5(3) of Schedule 4 to the 2002 Regulations. The 2002 Regulations are the The Road Vehicles (Registration and Licensing) Regulations 2002. Paragraph 5(3) of Schedule 4 is all about giving your tax SORN notice (as, indeed, is all of Schedule 4) http://www.legislation.gov.uk/uksi/2002/2742/schedule/4/made