moral hazard

Popular Terms
Circumstance that increases the probability of occurrence of a loss, or a larger than normal loss, because of a change in an insurance policy applicant's behavior after the issuance of policy. It may be due to the presence of incentives that induce the insured to act in ways that incur costs the insurer (but not the insured) has to bear. For example, overinsurance or substitution of insured valuable-assets with junk. In common usage, moral hazard suggests a conscious malicious or even illegal motivation, as opposed to an unconscious change in behavior. Compare with morale hazard.

Use 'moral hazard' in a Sentence

If you are not sure about a product and think it may be smart to pass on it the moral hazard may just be to strong.
19 people found this helpful
You can not always plan ahead for a moral hazard but when one comes about you need to be able to act accordingly.
18 people found this helpful
Tina's car was not quite damaged enough to total, but she had a crazy idea; she was going to damage it more and ask for an appeal, completely oblivious to the moral hazard she was going to create while hoping not to be caught.
17 people found this helpful

Email Print Embed