Insurance allows individuals and businesses to protect themselves against significant damage. By saying significant it is meant that if the damage is minor, then the insurance company will not compensate it. In your turn, you will hardly find it worth to pay a monthly premium to protect against a loss equaling 50$ or less, because this would not be considered a financial hardship.
An example where insurance makes sence is life insurance. Take you end up with premature death. If you were the only person who brings income to your family, then it would be hard for your family members to overcome the financial hardship. In this case the insurance comes due and your family receives compensation from the insurance company. This is how insurance works in similar circumstances.
If you want to protect yourself or other people by unpredicted financial losses then the types of insurance may include: