Physical Hazard - physical condition that increases the chance of loss like Defective wiring in a building.
Insurers incorporate appropriate warranties to reduce the physical hazard. Application of some clauses that will reduce the claim/loss amounts, Loading Premium,Restricting the cover granted are some of the ways to handle Physical Hazard
Moral hazard - dishonesty or character defects in an individual that influence the frequency or severity of the loss. Misusing the facility of insurance. Example buying health insurance after onset of a major ailment.
Moral hazard can be reduced using the mechanisms of co-payment, deductible, sub-limits & offering incentives like no-claim bonus in health insurance
Legal hazard - arises when certain features of the legal system or regulatory environment can increase the incidence or severity of losses
MODELEXAM® 
www.realsoftinfoplan.com