Do you have an example of a legal precedant being set that prooves that the clause is legal though?
As in England and Wales the Road Traffic Act 1988 prohibits a UK insurer from excluding minimum level cover anywhere in an EU member state in a place where insurance is mandatory (at the ring insurance IS mandatory under german law). Any clause in an insurance policy seeking to exclude mandatory cover is of no effect; see s. 145(3) and s. 148 of the Road Traffic Act.

So as far as I am aware, its purely a bluff by uk insurers!