Is an exposed ground wire dangerous?
Similarly, you may ask, is a bare ground wire dangerous?
It is not dangerous to touch a properly configured “ground” wire. You could just use the color of the insulation on it, Green, to tell you it is a ground wire. A bare wire will give you the same signal.
Keeping this in view, does earth wire need to be covered?
The earth or "ground" wire is normally bare. The wires are then jointly covered by the outer sheath. When installed, bare earth wires should be covered with an "earth sleeve" which can be bought in all sizes at an electrical store or most diy stores.
The appliance will operate normally without the ground wire because it is not a part of the conducting path which supplies electricity to the appliance. In the absence of the ground wire, shock hazard conditions will often not cause the breaker to trip unless the circuit has a ground fault interrupter in it.