Faking an accident to collect insurance proceeds is an example of a

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Faking an accident to collect insurance proceeds is an example of a moral hazard. Moral hazard refers to the possibility that an individual or organization will intentionally cause or allow a loss to occur in order to collect insurance benefits. It arises when the insured's behavior changes after entering into an insurance contract, in a way that increases the frequency or severity of claims. In this case, the insured is deliberately creating a loss in order to collect compensation, which is an unethical and illegal practice.

Faking an Accident to Collect Insurance Proceeds Is an Example