That's a very pessimistic way of looking at insurance. Sure, extended warranties on consumer goods and so on are things to be avoided, but insurance would still

That's a very pessimistic way of looking at insurance. Sure, extended warranties on consumer goods and so on are things to be avoided, but insurance would still exist in a world of informed and rational people. When you buy insurance you get reduced expected value (over going it alone) but you also reduce the variance - the cost of driving a car around becomes a somewhat predictable constant rather than there being the ever-present risk of a large cost. Yes, if you are in a financial position where the cost of a car is something you can take on the chin, then it is up there with extended warranties as something to avoid. But for the vast majority of people in the real world, that is not the case.