In a market without insurance, a potential policyholder would take actions to improve the potential for a good outcome up until A^*, where the marginal benefit of further action, MB, equals the marginal cost of further action, MC. If instead the policy offers full insurance, MB shifts to MB_FI, and the policyholder does not take any action (makes zero effort) to make the good outcome more likely. If the policy offers partial insurance, MB shifts to MB_PI, and the policyholder takes action level A*_PI.