Final answer:
Comparative or contributory negligence is a legal defense that reduces damages based on a person's own negligence contributing to the loss. In insurance, similar concepts of shared responsibility are applied through deductibles, copayments, and coinsurance, where the policyholder pays a portion of the loss to reduce moral hazard.
Step-by-step explanation:
The partial legal defense that reduces the amount of damages that a person can recover based on their own negligence contributing to the loss is known as comparative negligence or contributory negligence. These principles act as defenses in tort law, allowing the court to allocate responsibility and damages based on the level of negligence of each party involved. In insurance, a similar concept is applied through cost-sharing measures such as deductibles, copayments, and coinsurance. Under coinsurance, the policyholder is responsible for a certain percentage of the loss, while the insurance company pays the remaining costs. For instance, after a house fire, if the insurance policy stipulates an 80/20 coinsurance clause, the insurance would cover 80% of the repair costs while the homeowner would be liable for the remaining 20%. This method not only provides a balance of cost but also reduces moral hazard by ensuring that the policyholder has a financial stake in the risks covered by the policy.