moral hazard

noun

Definition of moral hazard

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

Recent Examples of moral hazard from the Web

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First Known Use of moral hazard

1881

in the meaning defined above

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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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