Car insurance is a form of collective money pooling, often run by a private company. Governments may offer insurance policies too, depending on the country, but the idea essentially the same with either option. Insurance is a safety net, supported by the finances of a large number of people.
The intention of car insurance is to act as a combonation of an investment in payments for possible future problems, and to be a collective amount of money, in case someone that just started paying for insurance has an accident which costs more than what they would otherwise be able to afford.
Insurance companies aren't community money pools, they have to generate profit. This means that a percentage of every contributor's money gets drawn into the paychecks of the company's employees, and the collective insurance-buyers are actually better off without the company's involvement. Unfortunately, a lot of governments require it by law. Insurance prices usually aren't a percent of the car's value, and cars with a very low value might be paid for many times over through insurance payments. Insurance also may only cover a limited amount of problems, and may be designed to not cover what people that can only afford low-coverage insurance are likely to damage. Young people usually have to pay much more for coverage, since insurance companies must assume they're guilty of poor driving habits until proven innocent (by not being in an accident over the course of a few years).
How Save Money on Car Insurance
Aside from the obvious, keeping a clean record and just being an experienced driver, you can trade in your car for a safer, less expensive, and less powerful car. Certain companies consider other details, like crash rates of cars of a given color, or number of safety options. Some companies offer tests which will lower your rates based on how well you score (sometimes these are only available to recover an old rate after the driver has had an accident). Options available to you are quite varied, so it's best to start your research based on country, state, and city.