The study of history can increase our wisdom and insight about human nature. By reading about the successes and failures of people in different circumstances, one can learn how to act and how not to act. The study of history allows us to see beyond the circumstances of our own age, and distinguish what is eternal from what is ephemereal. The importance of this is hardly to be over-estimated. As G.K. Chesterton says, the main purpose of education is that we realize that our conventional wisdom is not real wisdom.
Fiction allows history to come alive.
I'm also thinking that in past ages history was taught and passed on more in literary works than in textbooks. In my opinion, since history and literature are so closely intertwined in themes and meaning, they are a natural combination. I'd even say that history as the study of human nature can't reach its full potential except by literary means. All kinds of fiction serves this purpose, but particularly historical fiction, because the lives portrayed in historical fiction are further outside one's scope. I think historical fiction is valuable in the fact that the authors explore the why of a person's motivation in the particular mileau.