Most people can't afford to replace their house or their car or another expensive item that they own. Similarly, most people can't afford to pay for the care of someone who gets injured. Even for people who can afford these expenses, it is a large amount to pay for something that is unlikely to happen.
Insurance is about sharing or pooling your risks. Insurance developed from communities discovering that an individual often cannot afford a loss, but the community overall could afford the lose if everyone contributed a small amount each year.
Buying insurance today is no different. People should buy insurance for the losses that they cannot afford as an individual. Insurance companies today are very different from these original community groups, or even the coffee house of Edward Lloyd, the origin of the Lloyd's insurance market. However, the principles of insurance are no different.
When thinking about buying insurance - think about the losses where you would help your neighbours out - on the belief that they would help you out in the same circumstances. So for example, you would probably feel sorry for a neighbour if their television gets stolen, but you would probably think that your neighbour can afford to buy a new TV. However, if your neighbour's car is stolen you might think that is a much larger expense and they need their car to get t o work, so you would help out.