Well, you might be paying $100-$200 for your car insurance but when you have to claim insurance, depending on the damages, you can easily receive $1000-$2000 worth of coverage. The premiums the insurance company collects by selling insurance policies is less than what it provides, so do they manage to make profits? Well, insurance companies actually pool money from people and use the money to invest in different things. For instance, the invest in the stocks, bonds, mutual funds, real estate, equity market, etc. and earn profits from their investment. Their return on investment help them provide the necessary coverage for their customers.