Which aspect of insurance does Physical Hazard NOT account for?

Physical hazard specifically refers to tangible aspects of risk that can influence the likelihood of a loss occurring. This includes factors like the structural features of the insured property, the operational features related to how the property is used, and the external environmental conditions that can affect those risks.

Moral hazard, on the other hand, deals with the behavior and attitudes of the policyholder, such as whether they engage in activities that might increase the likelihood of a loss occurring or whether they might be inclined to commit fraud. Hence, the moral conditions of the policyholder are not considered a physical hazard.

Therefore, the characteristic focusing on the moral conditions of the policyholder is not encompassed within the definition of physical hazard, making it the correct answer.