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    Question

    It is a situation in which one party gets involved in a

    risky situation where the party knows that it is protected through insurance and the other party will incur the loss?
    A Moral Hazard Correct Answer Incorrect Answer
    B Forgery Correct Answer Incorrect Answer
    C Floating Policy Correct Answer Incorrect Answer
    D Endorsement Correct Answer Incorrect Answer
    E Binder Correct Answer Incorrect Answer

    Solution

    Moral hazard is a situation in which one party gets involved in a risky event knowing that it is protected against the risk and the other party will incur the cost.┬а It refers to behavioral changes that might occur and increase the risk of loss when a person knows that insurance will provide coverage.┬а

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