1. Those who are accused of possessing illegal substances but have not actually harmed anyone
2. Those who are accused of traffic violations for behavior that did not harm anyone
3. Those who are accused of copyright violation
4. Those who are accused of participating in prostitution that did not harm anyone and where no children are involved.
5. Those who have their assets seized
I have two major problems with this proposal.
1. I believe a functioning society needs rules in order to stay functioning, and rules are only useful when violation of these rules is punished in some way.
A durable functioning society also needs rules on how to change and adapt existing rules. So at least for those of us living in "democratic" countries there should be ways to change the rules that we don't like, or to emigrate into a country with different rules.
Your proposal is effectively an encouragement for breaking the rules, which I think is harmful to society.
2. Any kind of insurance costs at least as much as the risk that it covers. The problem there is that the insurance lowers the percieved risk for the insured individual, which incentivises them to take a higher risk, which drives up the overall cost and thereby the actual risk for the individual. From that it follows that an insurance can only work if there remains sufficient incentive for the insured to avoid producing an insurance case.
For example, health insurance works quite well, because although it lowers the percieved risk of the individual, nobody is interested in catching an illness. (Yes, that's a simplification. "quite well", not "perfectly".)
However, people who drive recklessly *want* to drive recklessly. Give them an insurance against traffic fines, and they will drive even more recklessly.