Why do you need car insurance?
Because it is required by law in most states.
And if you have an accident, you don't want the victims to sue you and take away your house and everything you own.
So that if you have an accident that damages someone else, or their property, those people will get suitable reparations, which they probably wouldn't if you couldn't afford to pay them out of your own pocket. In many countries it the law that you have to have at least third party insurance.