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Why buy insurance?
Insurance is bought for peace of mind and to divert disaster.   Diverting disaster is a good/great thing.  If your house burned down, if someone hit your car, or some other devastating event (think medical) happened that required a more allocation than you could afford the series of issues may snowball and cause you to lose a far greater amount of money than the initial incident.  This could be in the form of losing work time, losing a job, having to buy transportation quickly paying a premium, having to incur high rate debt and so on.   For the middle income and lower classes medical, house, and medical insurance certainly falls into these categories.  Also why a lot of states have buyout options on auto insurance (some will let you drive without insurance by proving bonding up to 250K.   Now the other insurance as I have alluded to is for peace of mind mainly.  This is your laptop insurance, vacation insurance and so on.  The premise of these insurances is that no matter what happens you can get back to "even" by paying just a little extra.   However what other answers have failed to clarify is the idea of insurance.  It is an agreement that you will pay a company money right now.  And then if a certain set of events happen, you follow their guidelines, they are still in business, they still have the same protocols, and so on that you will get some benefit when something "disadvantageous" happens to you.  We buy insurance because we think we can snap our fingers and life will be back to normal.  For bigger things like medical, home, and auto there are more regulations but I could get 1000 comments on people getting screwed over by their insurance companies.  For smaller things, almost all insurance is outsourced to a 3rd party not affiliated legally with a business.  Therefore if the costs are too high they can simply go under, and if the costs are low they continue helping the consumer (that doesn't need help).   So we buy insurance divert catastrophe or because we have fallen for the insurance sales pitch.  And an easy way to get around the sales pitch - as the person selling you the insurance if you can have their name and info and they will be personally liable if the insurance company fails their end of the bargain.