What type of hazard is characterized by laws that force insurers to cover risks they normally would not?

The correct answer is characterized by legal factors that impose coverage requirements on insurers, compelling them to insure certain risks that they might otherwise choose to exclude from their policies. Legal hazards arise from regulations, laws, or judicial decisions that dictate how insurance companies must operate. These can include mandates for coverage in specific areas, such as health insurance or auto insurance, which may not align with the insurer's typical underwriting practices.

In contrast, other types of hazards like moral hazard relate to the behavior of insured individuals who may engage in riskier behavior after obtaining insurance, whereas morale hazard pertains to a general negligence or lack of concern for loss because of having insurance. Physical hazards involve tangible conditions that increase the likelihood of loss, such as a dangerous location for a property. Understanding these distinctions helps clarify why legal hazard is the correct answer in this context.