General Insurance PrinciplesQuestion 168 of 474
An insured leaves a car unlocked with the keys inside, reasoning that insurance would pay for it anyway. This attitude is:
a.physical hazard, a tangible condition of the covered property
b.moral hazard, a deliberate plan to bring about a covered loss
c.legal hazard, a court climate that enlarges the insurer's payout
d.morale hazard, a careless attitude created by having coverage
Explanation
Morale hazard is indifference to loss because insurance is in place; the insured is not dishonest, just careless. Moral hazard involves dishonesty, such as staging a theft or inflating a claim, and nothing here shows the insured wanted the car taken. A physical hazard would be a tangible condition, like a broken door lock, rather than a state of mind.
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