General Insurance✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
An insured with comprehensive dental coverage skips regular checkups and ignores early warning signs because the insurance 'will take care of it.' This attitude is best described as a:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
A morale hazard is carelessness or indifference that arises because insurance exists — the insured assumes the insurer will absorb the consequences and so takes less care. Unlike a moral hazard, which involves intentional dishonesty, a morale hazard is unintentional neglect. This conduct increases the chance or severity of loss and is a concern for insurers because it erodes the loss-prevention incentives that normally protect against claims.
Why the other options are wrong
- B) A moral hazard is intentional dishonesty, such as exaggerating a claim or staging a loss; the insured here is merely careless, not fraudulent.
- C) A physical hazard is a tangible condition such as faulty wiring; an attitude is not a physical condition.
- D) Pure risk is a category of risk (loss or no loss only), not a description of careless behavior.
Memory hook
Morale = too lazy to care, thanks to the policy. Moral = a thief with a pen. Careless versus criminal.