5.4 A mobile phone manufacturer provides a warranty under which it covers all manufacturing defects up to five years after the purchase of a mobile phone.

During that period, the company repairs or replaces the phone free of charge. However, it does not cover any damage to the phone that may result from the buyer’s misuse, which includes dropping the phone over a hard surface or spilling liquid over it. Does this policy address moral hazard or adverse selection?

Explain.