I've had NOS on two of my previous cars.
firstly, insurance really isn't that much of problem..
for my 300zx, it cost me an extra £64 on my premium.
for my 350z, it cost me an extra £23.
Both cars were modified in other ways, and both insured with Adrian Flux.
As for melting your engine, that's a bit of a harsh overstatement.
All NOS does, is increase the amount of air that goes into the engine.
Think of it doing the same job as a turbo or supercharger. All three are designed solely to get more air into the engine.
NOS does this chemically, whilst chargers do it mechanically.
NOS itself doesn't burn, all it does is breakdown and release more oxygen, increasing the air density within the cylinder.
if you've got increased amounts of fuel in the cylinder to compensate this (which you should if you've got a proper NOS kit), then there are no increased chances of pinking or detonation.
We all know our engines can handle a supercharger (at least, the pre-facelift 6 pot units), and mac2750 here has literally just finished installing one that adds 70bhp.
By that rational, adding NOS that produces an additional 50-70bhp should be perfectly within the limits of the engine.
Most NOS systems will not work at below 3,500rpm, much in the same way most turbochargers don't kick in during lower revs.
If it's fitted and tuned professionally, the risk of any damage is just the same as having a professionally fitted and tuned charger.
There is SO MUCH internet myth that surrounds NOS that I really recommend you ring up a professional and chat with them about it.
I bought both my kits from "Wizards of Nos" who are up Doncaster way.
Extremely knowledgeable guys - especially Trevor, who helped alleviate my fears when I came to look for my first kit.
They're also very friendly, never pushed me to buy from them, and are more than happy to explain everything (be it good or bad) in detail with you either via email or over the phone.
Heck, you can even rock up to their door and pop in for a chat if you're local to them.