A homeowner buys a comprehensive policy and immediately stops locking his front door because he reasons that any theft will be covered. This change in behavior is BEST described as:
a.A morale (attitudinal) hazard
b.A moral hazard, arising from dishonesty or an intent to file a fraudulent claim
c.A physical hazard
d.A legal hazard
Explanation
A morale or attitudinal hazard is the careless behavior that grows because the insured knows coverage is in place. It differs from a moral hazard, which involves dishonesty or intent to file a fraudulent claim, and from a physical hazard, which is a tangible condition like a broken lock.
Law Reference: Insurance theory — hazardsThis topic, taught in full in the California Property & Casualty Broker-Agent guide. California Property & Casualty Broker-Agent Study Guide — 2026 Edition — PDF + EPUB, $24.99 · 14-day refund →
Practice all 531 questions free — no signup required.
Own the complete California Property & Casualty Broker-Agent guide — PDF + EPUB, $24.99 →
Related questions on this topic
- Under California law, insurance is best defined as a contract whereby one party undertakes to:
- A small business owner asks her broker to insure her chance of profit on a new restaurant venture. The broker should explain that this exposure is not insurable because it is:
- The principle that allows actuaries to predict losses with reasonable accuracy as the number of similar exposure units grows is:
- An auto insurer notices that drivers with three recent at-fault losses are far more likely to apply for a new policy than drivers with clean records. This pattern is BEST described as:
- Which of the following is NOT one of the four essential elements of an insurance contract?
- An insured pays a $900 annual premium and suffers a $300,000 fire loss in the first month of the policy. The fact that the value exchanged is unequal and depends on chance makes the insurance contract:
Last reviewed: · editorial process
PrepPass team · Verified against California Property & Casualty Insurance License Exam · How we review