Question

Many jurors assume the defendant has insurance coverage and therefor no harm is done by awarding the plaintiff damages. What are the moral hazards? What is the affect on insurance premiums on consumers?

Answer 1

there are many issues where a normal buyer of insurance never understands. first when they provide a policy they did not disclose all the limitations to the buyer, they just focus on the positive aspects and next they provide the same to the consumer. But when it comes to repayment or claims, they disclose many points, issues and make this process more difficult.

The other thing is that, here the insurance company is not paying money to the customer at free of cost. they are collecting premiums from thousands of people, and when the real need to comes to the people they are repaying whatever we paid earlier to them. Hence no need to think that they are paying from their pockets.

Do not think that one party is risky and the other part is bearing the risk, it is the nature of insurance business and do not think it comes under moral hazard. No one intentionally becomes sick, want to enjoy some pain, even the one who have 99 years old do not wish join in hospitals and go for treatment. The people who really suffers with pains and health problems join in care centers/hospitals and apply for claims.

the fact is that the premium calculted is based on the age and health conditions of the buyer of insurance. It is fact and accurate way. but there are some aspects which never come across. there is no guarantee that the person who is healthy may not hospitalized and the one who is weak may hospitalized. There are many other factors to be considered and fix the premium.