- What is Moral Hazard?: The tendency for insured individuals or businesses to take on more risk because they know they are covered.
- Examples of Moral Hazard:
- A person with health insurance may avoid exercising or eat unhealthily because they don’t have to worry about medical costs.
- Someone with full car insurance might be less cautious on the road.
- How Insurers Address Moral Hazard: By setting deductibles, co-pays, and limits on claim
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