Because you are building a portfolio to show to others and (perhaps) put on a website, you need a model release at the very least.
Regardless of the price, a signed agreement is a good idea. It allows both parties to have in writing what is, or is not, expected.
I believe that "agreement" is a better term to use here than a contract because it is my understanding that for a contract to be valid there has to be "non performance" clauses in it.
Commonly, when $$ changes hands, the non performance clause means that if the service provider does not perform, the money paid them is returned while if the purchaser of those services does not perform (wedding cancelled at the last minute) the money paid is kept by the contractor.
The problems for the photographer arise when the person purchasing the services believes that the service provided does not live up to the terms of the contract and decides that the $$ being returned is inadequate to cover the "damages" by non performance. Insurance then kicks in to cover the contractor if the courts find that he did not perform.
Is insurance necessary? I believe so. If you own a business where you can get sued for damages beyond your ability to pay and could lose your house, you need insurance.
For example.. say you shoot weddings on the side and you, the photogapher, decide to take the wedding party to a nearby park for pictures. One of the brides maids slips while walking down the path to the photo spot and shatters her ankle (oh yeah, it CAN happen) and it turns out she has no health coverage. You can bet you, as the photographer, will get named in the law suit AND if it turns out the whole business of going to that park was your idea, you WILL get found partially responsible for damages (park will also be named in the suit as well as the bride and groom).
In New York where there are NO limits on liability and where no one is EVER responsible for their own actions, you don't want to set yourself up w/o insurnace.
I have had experience in being named as a negligent party as part of a lawsuit. Fortunately, the Judge threw out the part against my business (not photography) but if he had not, I would have lost EVERYTHING.. my business, my home, my savings EVERYTHING even tho, IMO, I had nothing to do with the injuries. When it goes to court it can be a real crap shoot.. I have seen some pretty amazing decisions that fly in the face of the facts!
This is reality and it is not conjuring up fear. It is first hand experience.