Robby carpools to school with his friends, and he enjoys racing the other cars on the road whenever he can. His Dad lectures him about the dangers of speeding, but Robby thinks his Dad is overreacting. He's been driving for two whole years, so he knows what he's doing. And besides, they have good insurance, so it wouldn't be that big of a deal even if Robby did damage his car. In insurance terms, Robby's behavior is:

Robby's behavior can be classified as a morale hazard because it reflects a careless attitude toward risk due to the sense of security that comes from having insurance coverage. Morale hazards involve a lack of concern for loss, often resulting from the insured believing that their insurance will cover any negative events, leading to riskier behavior, such as speeding or reckless driving. Robby's perspective of believing that damages wouldn't matter as much because they have good insurance exemplifies this type of hazard.

In contrast, a physical hazard would refer to a tangible condition that increases the chance of loss, such as a broken guardrail on the road. A moral hazard typically relates to dishonest behavior or intentions, such as committing fraud or exaggerating claims. An insurance hazard is not a standard term typically used in the context of risk assessment in insurance. Understanding these distinctions helps clarify why Robby's mentality and actions align with the concept of morale hazards.