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MORALE HAZARD Definition & Legal Meaning

Definition & Citations:

Circumstance increasing loss-occurrence probability or abnormal loss due to an insurance policy applicant’s indifferent attitude after policy issuance. The insured being careless in locking the doors and windows when leaving home is an example. In common usage, morale hazard points to the insured party unconscious change in their actions or behaviors, versus a deliberate change to cheat the system or benefit from such circumstances. Contrast to moral hazard.


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