My turn for for my ten cents worth, option 62335-A (Section-C, clause-D of 1998, paragraph 1-26a)....... O-yes, do what most people do, get an E.K.A.F mot and base your insurance on that. The police have started asking for valid mot certs  and insurance docs so have em handy. If you do not have residency, it is a spot fine then and yes, driving with no insurance is is +- 500 - 1000 euro fine and probably your car. (Quoted from caught-un-insured people)

I had the same problem and the easiest way around it was to get a Spanish car, that is legal, tested, insured, vetted, inoculated.......  and in that we have to (and I am PROBABLY wrong) keep my insurance documents and receipt showing it's paid for.
(This has also meant I only need to keep one pair of knickers with me in the car!!)