An insured with comprehensive dental coverage skips regular checkups and ignores early warning signs because the insurance 'will take care of it.' This attitude is best described as a:

Why A is correct

A morale hazard is carelessness or indifference that arises because insurance exists — the insured assumes the insurer will absorb the consequences and so takes less care. Unlike a moral hazard, which involves intentional dishonesty, a morale hazard is unintentional neglect. This conduct increases the chance or severity of loss and is a concern for insurers because it erodes the loss-prevention incentives that normally protect against claims.

Why the other options are wrong

• B) A moral hazard is intentional dishonesty, such as exaggerating a claim or staging a loss; the insured here is merely careless, not fraudulent.
• C) A physical hazard is a tangible condition such as faulty wiring; an attitude is not a physical condition.
• D) Pure risk is a category of risk (loss or no loss only), not a description of careless behavior.

Memory hook

Morale = too lazy to care, thanks to the policy. Moral = a thief with a pen. Careless versus criminal.