The Crime of the Eliza

Starting in the 18th century, it became standard practice to take old, beat up ships and insure them beyond their true value. Underwriters typically signed on for 20, 30, 50, even 100 policies every day. An underwriter didn't have time to investigate the ship or owner he was ensuring because he had too many other policies to deal with. The Eliza is one of the earliest examples of what we now call a moral hazard.