Hey there Willy!
Your question states: Alan's car is worth less than a year's worth of auto insurance premiums. Why should Alan still get auto insurance?
If that car is that cheap, then he's rolling on a good deal there. So one thing for sure is that he should totally get some auto insurance because his car is that cheap and it should be affordable for him.
But, from your options above, I would go with the option C.) because Alan may need to be insured against liability from traffic accidents.
If he were to go into a accident, is would be insured against him, and no one else, but it actually really depends who caused this accident, but still it can also still go on him, because sometimes it can be your fault.
I hope this helps you!