South Carolina Life Insurance Practice Exam

A person who does not lock the doors to their house shows what type of hazard?

1. Physical Hazard

2. Moral Hazard

3. Morale Hazard

4. Financial Hazard

The correct answer is: Morale Hazard

The scenario describes a situation where a person neglects to lock their doors, which reflects a careless attitude towards security and safety. This behavior exemplifies morale hazard. Morale hazard arises from an individual's carelessness or lack of concern for safeguarding their own property, often due to a belief that insurance will protect them against any loss. In this case, the person may feel overly comfortable or complacent, leading to an increased risk of theft or damage. By failing to take simple precautionary measures, such as locking the doors, the individual demonstrates a level of indifference that can lead to greater risks. This type of behavior is typically not caused by fraudulent intent or ethical considerations, which are aspects related to moral hazard, but rather by the individual's attitude toward their own security and the potential consequences of their negligence.