Centro de Documentacion de Fundación MAPFRE - Optimal insurance design under limited liability

MAP20260003542

Optimal insurance design under limited liability / Andrea Bergesio, Pablo Koch-Medina and Cosimo Munari

Sumario: This article examines how insurance contracts should be structured when policyholders face limited liability. Using an expected-utility approach, it shows that full insurance is not always optimal because large losses can lead to bankruptcy, making default more attractive for the insured. The study compares general, increasing, and doubly increasing contracts and explains how limited liability reshapes incentives for coverage. It concludes that capped deductibles emerge as the optimal form under doubly increasing conditions, extending previous literature and highlighting how limited liability transforms both the design and appeal of insurance protection

En: The Journal of risk and insurance. - Nueva York : The American Risk and Insurance Association, 1964- = ISSN 0022-4367. - 17/11/2025 Volumen 92 Número 4 - noviembre 2025 , p. 1122 - 1142

1. Contrato de seguro . 2. Cláusulas limitativas . 3. Franquicias . 4. Análisis de riesgos . I. Koch-Medina, Pablo . II. Munari, Cosimo . III. American Risk and Insurance Association . IV. Título.