Sheeran was prosecuted by the DVLA in a behind closed doors hearing and submitted a letter of explanation to accompany his guilty plea.
He explained the car "remained within the control of the workshop", based in Durham, since he handed it over in 2021 and had been kept off public roads "at all times".
He also wrote: "There has accordingly been no risk to third party members of the public arising from uninsured driving of the vehicle.
"I have at no point had physical possession or practical control of the vehicle.
"In fact, the vehicle has been inoperable since 2021, through the relevant date and to the present day.
"It is still in the process of being restored and converted into an electric vehicle at the workshop," Sheeran added.
He later apologised for taking up court resources but also insisted he never received the DVLA's initial offer of an out-of-court fine, which he said he would have paid immediately.
Sheeran called it a "genuine administrative misunderstanding" and said the car was declared off-road with a SORN notice on 1 February this year.
As Sheeran's case was dealt with under the Single Justice Procedure system, it could be sent to any magistrates' court regardless of the location of the offence, based on a national database.
He was among 1,451 people across England and Wales to be convicted last week of failing to insure their vehicles.
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