This appears as an ornate leather belt with a bronze clasp. It will magically alter to fit any wearer's size. During initial tests, it will appear to provide +2 to both AC and Saving Throws of the wearer.
The first time it is used in combat, it becomes impossible to remove, and reveals its true nature. In fact, it acts at -2 to AC and Saving Throws, and the wearer must roll a Saving Throw vs. Magic (including the minus effect from the belt) each and every time there is even a remote chance that some harm might come to them. Failing this Saving Throw means the character is filled with so much fear and anxiety, that they will simply refuse to participate, going so far as to run away, or hide in the corner while their companions are under attack. This includes combat, of course, but, at the GM's discretion, also such things as crossing a river in a boat ("I might fall over and drown!"), walking through a busy market ("There are pickpockets everywhere!"), or even attending a party ("What if they laugh at me?").
The wearer of this belt may well be incapable of functioning after a while, hiding away in a cave or remote cloister, obsessing endlessly about anything bad that might happen to them, up to and including their health ("Is that a rash? I'm doomed!").
A successful Remove Curse spell will get the belt off them, and put an end to the paralyzing anxiety.