First and foremost, you did not mention your current state. This is important because the law regarding trailers differs from state to state. What is considered to be illegal when it comes to trailers in Florida may not be under Mississippi law. But basically, it is not usually the trailer itself that gives the problem but the fact that you have it placed in such a way that it is covering your license plate.
When police patrols on the road happen to see that your trailer is obscuring you license plate then it prompts them to hail you and ask some questions. This is just a part of their standard operating procedure to make sure that you have no real intentions of keeping your plate way from the public or you are not an outlaw on the loose either.
For your second question, again, the legality of your case is still dependent on the law of the state where you were allegedly caught and ticketed. You can always check this out with your lawyer or even with the police officer himself. It is also a good thing to remember that awareness of the law is every citizen’s responsibility.
About your car insurance coverage, you are considered lucky if you have purchased and have included what they call a ‘trailer liability” on your insurance policy. This type of insurance will include all kinds of trailers (from horse trailers to travel trailers). But note also that not all companies offer this type of insurance. So if you really are the type who travels a lot and is always in need to be with a trailer, then you should make time to look for a company that offers the said type.
The advantage of purchasing a “trailer liability” and including it in one’s policy is that it will cover own damage to your caravan or trailer; a Third Party Liability wherein the policy holder is involved in an accident and becomes legally liable for the properties that has been damaged and last but not the least, theft of the caravan or trailer.
To wrap up everything, the things that one should remember when it comes to trailers is to make sure that it does not cover the primary vehicle’s license plate, to purchase a “trailer liability” when one cannot help but travel with a trailer and to be aware of the law regarding trailers on the states one wish to visit or make a stop. Do all these and expect a hassle-free road adventure.