What term describes the attitude of an individual who takes risks because they feel insured will cover the consequences?

The term that best describes the attitude of an individual who takes risks because they believe insurance will cover the consequences is morale hazard. This concept refers to the tendency of insured individuals to engage in riskier behavior than they might otherwise if they did not have insurance coverage. The existence of insurance can create a sense of security that leads to a lack of caution or increased recklessness, as individuals might feel less accountable for the potential consequences of their actions due to the safety net provided by the insurance.

Understanding morale hazard is crucial in the insurance industry, as it can impact the likelihood of claims being made and influence the strategies that insurance companies implement to mitigate such risks. This includes measures like higher premiums for certain high-risk behaviors or educating clients on maintaining safe practices to prevent losses.

Other terms such as exposure and peril relate to risk in different contexts but do not specifically address the attitude driven by the existence of insurance coverage. Physical hazard refers to tangible conditions that increase the chance of a loss occurring but, again, does not encompass the mindset linked with morale hazard.