What happens when there is no plastic coating on a electrical wire?

Nothing happens. The wire will still conduct electricity. An example of this is the overhead utility wiring. The insulation on a conductor is there strictly to keep the conductor from touching any thing that would ground the conductor. This grounding could be from another adjacent conductor or a grounded medium around the conductor. A grounded conductor will trip the over current protection and trip the circuit off line. Without an insulation on the wire multiple wires in a conduit could not be utilized.