(Solved):How does the presence of significant moral hazard impact the insurance principle? View Answer…

 

Question

How does the presence of significant moral hazard impact the insurance principle?

 

EXPERT ANSWER

When there is a presence of moral hazard, one party tends to take additional risk that have a negative impact on other party. In insurance principle, the presence of moral hazard the property owner will tend to engage in a risky situation and will try less to avoid the risky situation because of insurance coverage.

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