The term insurance can be defined in both financial and legal terms. How do these definitions differ? 2. How does insurance redistribute the costs of losses? 3. What is the difference between insurable losses and depreciation expenses? 4. Describe the difference between a named-perils policy and an open-perils policy. 5. What is the difference between a hazard and a peril? Give examples of each. 6. Why is it the chance of loss, and not the loss itself, that creates the need for insurance? 7. How does a moral hazard differ from a physical hazard? Give examples of each. 8. Define the law of large numbers. What are its implications for an insurance system? 9. E xplain the differences between social insurance and private insurance programs.