That seems like it would end up with police being incentivised to turn a blind eye to those who can afford expensive lawyers more than they already do?
Super simple: if policeman arrest rich guy who can hire good lawyer, then this guy have much higher chances to win in a court against policeman / police department and insurance company gonna have to compensate. So insurance premium gonna be higher for them in that case.
On other side piss poor suspect don't have a lawyer and capacity to get compensation by "police insurance".