I'm sure there are websites to explain it, but insurance is quite simple: the purpose of insurance is to cover a loss that you can't afford. It is a way to pool risk of unlikely (but financially catastrophic) events across many people.
How much insurance to hold and what deductibles to use, depends on your ability to cover the loss if it were to happen. Similar to what Bakari said, for an old car that is worth a few thousand dollars, for example, if you have $40,000 sitting in the bank, you don't need to worry about insurance to cover the loss of the car - you could afford to replace it in the unlikely event it was totalled. For more expensive things like houses, you can raise the deductible (saving you money on premiums) to a level that you can afford if your house was destroyed or severely damaged.
Liability insurance is (in my mind) somewhat separate from other types, as liability settlements can be very large, for example if someone is injured and sues for years of lost income. No one except the very rich could afford to cover those losses, so you should always have liability insurance.