Physical Hazard

Physical hazards — Physical hazards are tangible conditions that increase the chance of loss. Poorly controlled diabetes and work in a lead foundry are concrete, objective facts that raise the probability of illness or injury. Physical hazards can be identified, measured, and priced by underwriters. They are distinct from moral hazards, which involve dishonesty, and morale hazards, which involve carelessness, and they are not a type of risk such as a speculative risk, which involves a chance of gain.

National insurance concept

A chronic back condition that increases the chance of future claims — A physical hazard is a tangible condition that increases the chance or severity of loss. A chronic back condition is a measurable, physical state that makes future medical claims more likely, so it is a physical hazard in health underwriting. Physical hazards are distinguished from moral hazards (intentional dishonesty) and morale hazards (carelessness fostered by insurance). Underwriters weigh such physical conditions when classifying the risk and setting the premium.

National insurance concept