I've always heard of the term insurance and that I should buy insurance if I buy a car.  What does that mean?
Insurance is a way of protection from financial loss. It is there in case you have a wreck.
Why would a company insure me in that manner?  Won't they be out of pocket?  How do they make money from me?
Well, you're going to take a loss. You will pay monthly to guarantee the insurer's promise to compensate you in the event you are in a wreck.