Lucy’s behavior of leaving her necklace in her car’s cupholder exhibits what type of hazard?

Lucy's behavior of leaving her necklace in her car's cupholder exemplifies a morale hazard. Morale hazards arise from an individual’s carelessness or lack of concern for their belongings, often because they have insurance coverage that diminishes their perceived risk. In this case, by leaving a valuable item unsecured in an accessible location, Lucy demonstrates a casual attitude toward the potential for theft, indicating she may not be fully protective of her property due to the confidence that insurance would cover any loss.

Physical hazards refer to tangible conditions that increase the likelihood of a loss, such as a broken sidewalk or a slippery floor, while moral hazards involve dishonest actions or fraudulent behavior. The term "hazard" by itself is too broad and does not specify the type of risk being examined. Identifying Lucy’s behavior as a morale hazard captures her lack of diligence concerning her property as well as the implication of insurance on her attitude toward risk management.