An underwriter and a claims adjuster are reviewing several different client files. Match each specific real-world risk scenario with its correct insurance classification.
- A policyholder exaggerates the value of stolen electronics on a police report to receive a larger claim settlement.Moral Hazard
- A delivery driver repeatedly ignores speed limits in company vehicles, feeling indifferent to safety because the employer's auto policy covers collisions.Morale Hazard
- A sudden hailstorm shatters the windshields of fifty new vehicles sitting on an auto dealership's outdoor lot.Peril
- A homeowner installs substandard, unapproved plumbing materials to save money during a bathroom renovation, increasing the likelihood of water damage.Physical Hazard
Answer
The correct matches align the claim exaggeration with Moral Hazard, the careless speeding with Morale Hazard, the hailstorm with Peril, and the substandard plumbing with Physical Hazard.
Each scenario accurately represents a core risk management concept. The hailstorm actively causes the loss (Peril). The substandard plumbing is a tangible defect in the property (Physical Hazard). Exaggerating a claim is a dishonest, fraudulent act against the insurer (Moral Hazard). Careless driving due to the safety net of an insurance policy is an act of indifference (Morale Hazard).
Step-by-Step Solution
Key Concept
Distinguishing between Perils (causes of loss) and the three distinct types of Hazards (Physical, Moral, Morale).