Moral Hazard

This is the increased possibility arising from any personal, not physical characteristic of a person or situation that now increase the likelihood of a claim occurring or could increase the severity of the claim.

Characteristics such as bad housekeeping habits, poor financial standing, lack of fire extinguishers, could intensify the severity of loss.

An example of this, could be a person having three or more mortgages, as not every company will accept this as new home insurance business. Another example, would be the principal having a bankruptcy history for a new commercial or business insurance policy.