Optimal insurance design under limited liability

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<title>Optimal insurance design under limited liability</title>
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<namePart>Koch-Medina, Pablo</namePart>
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<namePart>Munari, Cosimo </namePart>
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<abstract displayLabel="Summary">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</abstract>
<note type="statement of responsibility">Andrea Bergesio, Pablo Koch-Medina and Cosimo Munari</note>
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<topic>Contrato de seguro</topic>
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<subject xmlns:xlink="http://www.w3.org/1999/xlink" xlink:href="MAPA20260000916">
<topic>Cláusulas limitativas</topic>
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<topic>Franquicias</topic>
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<topic>Análisis de riesgos</topic>
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<title>The Journal of risk and insurance</title>
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<publisher>Nueva York : The American Risk and Insurance Association, 1964-</publisher>
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<identifier type="issn">0022-4367</identifier>
<identifier type="local">MAP20077000727</identifier>
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<text>17/11/2025 Volumen 92 Número 4 - noviembre 2025 , p. 1122 - 1142</text>
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