Which type of hazard may lead to acts of negligence increasing the risk?

A morale hazard refers to a situation where an individual's behavior changes as a result of having insurance or protection from risk, potentially leading to reckless or careless actions. When a person feels that they are shielded from the consequences of their actions due to insurance, they might engage in riskier behaviors, which increases the likelihood of negligence. For example, if someone has health insurance, they may neglect to take proper care of their health because they know they will be covered in case of a medical issue.

By contrast, moral hazard involves intentional fraudulent behavior, where someone may deliberately choose to cause a loss to benefit from insurance. Legal hazards pertain to the regulatory or legal environment that can increase risk, but it does not directly engage with the behavior of the insured individual. Exposure relates to the actual risk inherent in a situation but does not describe the change in behavior that results from having insurance. Thus, morale hazard is the most appropriate term to describe how negligence may be influenced by an individual's change in attitude when they feel protected against potential losses.