Types of Hazards and Fraud

Question 1

4 types of hazard

Answer 1

1. ) Moral
2. ) Morale
3. )Physical
4. ) Legal

Question 2

Fraud

Answer 2

• Deceiving an insurer to profit from an insurance policy.

- usually involves misrepresentation or concealment.

Question 3

Soft “opportunistic” fraud

Answer 3

Exaggerating a claim to inflate the indemnity

Question 4

Hard fraud

Answer 4

Deliberately causing, planning, or faking a loss

Question 5

Moral Hazard

Answer 5

• Results from the policyholder’s deliberate decision
• deliberate immoral behavior
• Involves reckless behavior because of the financial security offered by insurance
• is a type of “behavioral hazard”.

Question 6

Morale hazard

Answer 6

Risky behavior because of the comfort of insurance protection

Question 7

Legal hazard

Answer 7

Increased chance of loss because of legal action

Question 8

Physical hazard

Answer 8

physical conditions that make losses more likely