Moral hazard Definition & Meaning – Merriam-Webster

causing harm because another party is obligated to remedy the consequences of the harm caused
Patricia A. McCoy, a professor at Boston College of Law, said that during the financial crisis of 2008, the cap on deposit insurance was lifted under the Transaction Account Guarantee Program for most banks, and the suspension remained in place until the end of 2010. … Ms. McCoy said regulators and lawmakers need to be careful about permanently raising or eliminating the deposit cap as it can encourage unnecessary risk taking. “Every time this happens it increases the potential for moral hazard going forward,” Ms. McCoy said.
—Matthew Goldstein
specifically : the possibility of loss to an insurance company arising from the character or circumstances of the insured
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