58. The idea of insurance is that we all face risks that are unlikely but carry a high cost. Think of a fire destroying your home. Insurance spreads the risk: We all pay a small amount, and the insurance policy pays a large amount to those few of us whose homes burn down. An insurance company looks at the records for millions of homeowners and sees that the mean loss from fire in a year is per person. (The great majority of us have no loss, but a few lose their homes. The $250 is the average loss.) The company plans to sell fire insurance for $250 plus enough to cover its costs and profit. Explain clearly why it would be unwise to sell only 12 policies. Then explain why selling thousands of such policies is a safe business.