What is the term for the hazard resulting from a person's indifference to loss due to having insurance coverage?

The term that accurately describes the hazard arising from a person's indifference to potential loss because they have insurance coverage is known as morale hazard. This concept refers to the behavior of individuals who may take greater risks or be less cautious, believing that their insurance will cover any potential losses. For instance, a person with comprehensive car insurance might drive less carefully than someone without insurance, feeling protected from the financial consequences of an accident.

In contrast, moral hazard relates to dishonest behavior intended to deceive or manipulate insurance policies, while physical hazard refers to physical conditions that increase the likelihood of loss, such as a slippery floor that could lead to accidents. Operational hazard pertains to risks associated with the day-to-day operations of a business. Thus, morale hazard specifically points to the attitude and behavior influenced by having insurance coverage.