Moral vs Morale vs Physical Hazards


In Insurance, a Hazard is something that increases the risk of occurrence of loss. For example driving recklessly, living near the forest that catches fire every summer, bad intentions to claim insurance are examples of different types of hazards. Moral hazards are intentional claims with bad intent like projecting higher than actual loss, intentionally burning poor crop to claim insurance etc. Morale hazards are which increase the risk due to unsafe acts of the person although person is not intentionally trying to cause the damage to claim money from insurance company. Morale hazards arise out of an insured’s indifference to the risk involved. For example driving recklessly, trying to run on slippery road, not following traffic rules etc are some examples of the morale hazards. Physical hazards exist physically like higher sugar level in a person, loose brakes of a vehicle, worn out tires, faulty wiring are examples of physical hazards.

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