Moral hazard in auto insurance might refer to:
A)an auto owner failing to maintain the car, increasing the likelihood of an accident.
B)an applicant withholding information from the insurance company about the likelihood of having an accident.
C)an applicant lying on their application form about their health history.
D)an applicant having more cars than they announce when they complete their application.

Question

Quizplus · Accepted Answer

Moral hazard in auto insurance refers to the increased risk of loss or damage caused by the insured's carelessness or reckless behavior. Failing to maintain a car increases the likelihood of an accident, hence making it a moral hazard. The other options (B, C, and D) are examples of fraudulent behavior, not moral hazard. Moral hazard in auto insurance refers to the behavior of the insured that increases the likelihood of a loss, such as not maintaining the car properly or driving recklessly, which can lead to more accidents and claims. Choices B, C, and D refer to other types of insurance fraud and misrepresentation.

Moral Hazard in Auto Insurance Might Refer To