Updated : 12/2012
Your car insurance policy from your home country covers you throughout the EU if you injure someone.
Your car's number plate is proof that you have liability insurance. This means that police in another country will not normally stop you just to check if you are insured.
It is of course best to always take your insurance papers with you. This may make things easier if you get in an accident or are stopped by the police.
Ronaldo was stopped for speeding in France. Because he did not have his insurance papers with him, the police made him call his insurer in Portugal to prove he was insured.
Even though technically you do not have to, carrying your insurance papers with you is the best way to prove you are covered and can save you time and money if you run into problems abroad.
In this case, the 27 EU member states + Iceland, Liechtenstein and Norway