Which of the following best describes a moral hazard?

A moral hazard refers to a situation where a person's behavior changes in relation to the risk they are taking on due to the existence of insurance coverage. Specifically, when an individual feels protected by their insurance policy, they may engage in riskier behaviors or act with less caution, thereby increasing the likelihood of a loss occurring.

In this context, the idea is that the insured party's carelessness or reckless attitude contributes to their level of exposure and the risk of loss they present to the insurer. This change in behavior has significant implications for insurance practices, as it can lead to more frequent or severe claims and may raise overall insurance costs.

The other options do not accurately reflect the definition of moral hazard. Intent to commit fraud involves deliberate deception, which is distinctly different from the behavior changes associated with moral hazard. Natural disasters are external events that happen independently of human behavior and do not relate to the concept of moral hazard. Underinsurance refers to having insufficient insurance coverage relative to the value of the insured item but again does not pertain to the behavioral aspect characteristic of moral hazard.