Which term describes an indifferent attitude toward risk, often associated with insured parties seeking easy coverage?

Which term describes an indifferent attitude toward risk, often associated with insured parties seeking easy coverage?

• A. Morale Hazard
• B. Moral Hazard
• C. Hazard
• D. Peril

Answer: (A)

Morale hazard describes a careless or indifferent attitude toward risk that comes from having insurance. When people feel protected by coverage, they may skip precautions or act less cautiously, which can increase the chance of a loss or its severity. This differs from moral hazard, which involves dishonest or fraudulent behavior to obtain insurance or to claim more than deserved, and from hazard or peril, which are about conditions or causes that raise risk or lead to losses. For example, leaving a car unlocked or not maintaining property because losses will be covered illustrates morale hazard.

Morale hazard describes a careless or indifferent attitude toward risk that comes from having insurance. When people feel protected by coverage, they may skip precautions or act less cautiously, which can increase the chance of a loss or its severity. This differs from moral hazard, which involves dishonest or fraudulent behavior to obtain insurance or to claim more than deserved, and from hazard or peril, which are about conditions or causes that raise risk or lead to losses. For example, leaving a car unlocked or not maintaining property because losses will be covered illustrates morale hazard.