Insurance

By creating a "comprehensive security" for its policyholders, an insurance company inadvertently May that its insured May not be as risk they might otherwise be (since, by definition, the insured has transferred the risk for the insurer). This problem is known to the insurance industry as moral hazard. To reduce their own financial risks, insurance companies have contractual clauses that mitigate their obligation to provide coverage if the insured person engages in conduct that significantly boosts the risk of loss or liability.

For example, life insurance companies May require higher premiums or refuse outright coverage for people who work in hazardous occupations or engaging in hazardous sports. Liability insurance providers do not provide coverage for liability arising from intentional crimes committed by the insured. Even if a supplier were so irrational that the desire to provide such coverage, it goes against the public policy of most countries to allow such insurance to exist, and therefore it is generally illegal.