moral hazard

noun

Definition of moral hazard

:the possibility of loss to an insurance company arising from the character or circumstances of the insured

First Known Use of moral hazard

1881


Law Dictionary

moral hazard

noun

legal Definition of moral hazard

1 :the possibility of loss to an insurance company (as by arson) arising from the character or circumstances of the insured
  • deductibles decrease moral hazard
2 :the likelihood of investors to take greater risks because of the knowledge that losses incurred as a result of those risks will be covered by another (as a government)

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