Insurance 101 – Chapter 3 – Volume 10 – The Morale Hazard

The Morale Hazard

The “morale hazard” is the increase in uncertainty brought about by the indifference of a policyholder. Because of this indifference the policyholder may neglect ordinary precautions to protect against loss. The result is an increase in the probability of loss or an increase in the severity of loss. In many cases the difference between “moral hazard” and “morale hazard” may be only one of degree. If the property owner takes steps to destroy his or her own property, it is a “moral hazard.” If the property owner fails to take steps that would help to protect against a loss, that is a “morale hazard.” The “morale hazard” is usually not considered as dangerous as the “moral hazard.”

The following video was adapted from my book, “Insurance Claims A Comprehensive Guide” Published by the National Underwriter Company and is available at the Zalma Insurance Claims Library

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The author and publisher disclaim any liability, loss, or risk incurred as a consequence, directly or indirectly, of the use and application of any of the contents of this blog. The information provided is not a substitute for the advice of a competent insurance, legal, or other professional. The Information provided at this site should not be relied on as legal advice. Legal advice cannot be given without full consideration of all relevant information relating to an individual situation.

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