In short: Insurance is a contract in which you pay a regular sum (the premium) to an insurer, which agrees to pay you if a specified event happens — damage, an accident, illness or death.
Simply put: Many people pay a little so that nobody pays alone for a big disaster. On average, policyholders pay more than they get back — the difference covers the insurer's costs and profit. So insurance is worth it for losses you could not bear yourself. Small losses are cheaper to cover from your own reserve.
Example: 100 people each pay €50 a year into a shared pot — €5,000. If one of them suffers a €3,000 loss, the pot covers it and nobody loses more than €50.
Watch out: "Insure everything" — insurance for small things is often the most expensive compared with the risk. Insure the big things; keep a reserve for the small ones.
Example: Bulgaria — Insurance is governed by the Insurance Code and supervised by the Financial Supervision Commission (FSC), which keeps the registers of insurers and intermediaries.
Check in your country — Find the register of licensed insurers kept by your national insurance supervisor.
Source: Insurance Distribution Directive (EU) 2016/97 — https://eur-lex.europa.eu/eli/dir/2016/97/oj · FSC (Bulgaria), registers — https://www.fsc.bg/registri-i-spravki/