Strongly correlated quantum matter hosts a rich variety of remarkable properties, but the organizing principles that underlie the behavior remain to be established. Graphene heterostructures, which can host narrow moiré electron bands 1 that amplify the correlation effect, represent a new setting to make progress on this overarching issue. In such correlated moiré systems, an insulating state is a prominent feature of the phase diagram and may hold the key to understanding the basic physics. Here we advance the notion of a fragile insulator, a correlation-driven insulating state that is on the verge of a delocalization transition into a bad metal. Using a realistic multiorbital Hubbard model as a prototype for narrow band moiré systems, we realize such a fragile insulator and demonstrate a nematic order in this state as well as in the nearby bad metal regime. Our results are consistent with the observed electronic anisotropy in the graphene moiré systems 2-5 and provide a natural understanding of what happens when the insulator is tuned into a bad metal [6][7][8] . We propose the fragile insulator and the accompanying bad metal as competing states at integer fillings that analogously anchor the overall phase diagram of the correlated moiré systems and beyond.