As the economy recovers from the Great Recession, the insurance industry is experiencing an increase in the need to evaluate risk retention and risk transfer mechanisms tailored to the commercial policyholders’ risk management goals as applied to its policy provisions and obligations owed to its insured. Whether labeled as a large or high deductible, matching deductible, or self-insured retention, these mechanisms are governed by the plain language of the relevant policy provision or endorsement and insurers and insureds alike can minimize potential exposures by ensuring that the relevant policy language aligns with their intent. In addition, these vehicles bring their own set of unique considerations in order to maintain good faith practices.
For example, in Roehl Transport, Inc. v. Liberty Mutual Insurance Co., 784 N.W.2d 542 (Wis. 2010), the court recognized a claim for bad faith failure to settle within the insured’s deductible. The court explained:
“Just as in traditional third-party excess judgment cases, the insured with a high deductible needs the protection of a bad faith cause of action to guard against the risk that an insurance company’s exercise of control over a claim might favor its own financial interests over those of the insured. This possibility gives rise to a cause of action for bad faith.”
Id. at 554-55. Although there was no excess verdict, the Roehl court...
