I've never heard of that before to be honest. If you've got comprehensive insurance, you're already insured to drive your car during the practical test. If for any reason during the driving test, the examiner thinks you're going to put other road users at risk, then he will ask you to pull over and take over. He will take the car back to the driving test centre. At that point somebody else who is insured on your car can drive you home (or people who are allowed to drive other vehicles under their car insurance policy can do that as well).
Is your driving instructor an approved one? And are you taking him with you for your practical test?