Moral hazard would lead to
A)Only risky drivers buying insurance
B)More risky drivers buying more insurance
C)Drivers taking on a lot more risk after buying insurance
D)Drivers becoming a lot more careful after buying insurance

Question

​Moral hazard would lead to
A)​Only risky drivers buying insurance
B)More risky drivers buying more insurance
C)Drivers taking on a lot more risk after buying insurance
D)​Drivers becoming a lot more careful after buying insurance

Quizplus · Accepted Answer

Moral hazard refers to the increase in risky behavior that can occur when individuals or organizations are protected from the consequences of their actions. In the context of insurance, moral hazard can lead drivers to take on more risk after purchasing insurance because they know that their losses will be covered. This can result in higher accident rates and more costly claims for insurance companies. Therefore, option C is the best choice.

​Moral Hazard Would Lead to

Moral Hazard Would Lead to