This dissertation consists of three chapters analyzing the optimal design of insurance contracts. I consider three relevant contexts that change the central trade-off between the provision of insurance and the provision of incentives. The first chapter analyzes the role of biased beliefs for the optimal design of static and dynamic insurance contracts. The second chapter analyzes the role of training for the design of unemployment insurance. The third chapter analyzes the role of heterogeneity in risk perceptions for the optimal design of screening contracts in a model with moral hazard and adverse selection.