In American Home Assurance Co., Inc. v. Hermann's Warehouse Corp., 117 N.J. 1, 563 A.2d 444 (1989), the Court recognized that an insurer's obligation to exercise good faith "depends upon the circumstances of the particular case." Id. at 7, 563 A.2d 444. It pointed out that "the boundaries of 'good faith' will become compressed in favor of the insured depending on those circumstances" presented. Id. It is the nature of the insured's risk that determines the obligation required by the insurer to fulfill its duty of good faith and fair dealing. American Home, supra, 117 N.J. at 7, 563 A.2d 444. For example, a liability insurer's obligation to act in good faith when exposing an insured to a possible excess verdict in the face of a demand by a claimant to settle within the policy limits requires it to approach the settlement "as if there were sufficient coverage to satisfy the potential verdict-in other words, as if its own funds were at risk." Id. at 8, 563 A.2d 444. By contrast, where the insured's deductible is at risk and the insured's consent to settle is not required, the settlement of the matter in the face of the insured's demand to litigate will not be considered manifest bad faith. Id. at 9, 563 A.2d 444. Even bad judgment on the part of an insurer, which might otherwise constitute bad faith for refusal to pay a first party claim, does not amount to circumstances constituting bad faith for wrongful payment given the insurer's broad discretion in the disposition of third party claims. Id. at 10, 563 A.2d 444. A court "should not second guess a legitimate, albeit questionable, judgment call." Id.