Auto insurance and franchise: is there any benefit? Unconditional deductible under an insurance contract.

Unconditional CASCO franchise

The word "franchise" is translated from French as "benefit". This definition means the condition of an insurance contract, according to which the insurance company will be exempt from a certain amount of compensation for losses. To do this, you will need to set the size of the franchise. In the legislation of the Russian Federation, the franchise was defined only in 2014. For almost 20 years, the concept was not defined in the legislation, since there was not a single normative or legal act.

An unconditional deductible in insurance is

Franchise conditional and unconditional

The deductible is set both as a percentage of the amount of damage, and in absolute terms to the sum insured. There is a type of franchise - conditional and unconditional. What is a conditional franchise? This concept means the removal of liability from the insurance company for the harm caused, which is not higher than the deductible amount previously determined. Full coverage will take place if the amount of damage is greater than the deductible. What does unconditional franchise mean? This means that this type of franchise will be applied without any conditions and in full order. With this type of franchise, in any situation, the damage will be compensated minus a certain percentage. In this case, insurance compensation can be determined according to the following formula: the amount of the unconditional deductible is subtracted from the amount of harm caused.

Unconditional deductible under an insurance contract

Unconditional deductible under an insurance contract

In addition to the types of franchises listed above, there are other types, such as temporary, dynamic and high. This type of franchise is extremely rare. Any insurance contract also includes such an indispensable element as a franchise. Such an element of the contract is necessary to determine the part of the damage that will be considered unrecoverable. Let's take an example of what a franchise is. For example, someone wants to insure their country house. If an insured event such as a fire was stipulated in the insurance contract, then as a result of this disaster, the insurance company will be obliged to compensate the damage to the person who insured his country house. At the same time, a certain limiter will be set. This limiter will be considered that part of the damage that can not be compensated. The conditional deductible is determined by a percentage of the principal amount. It can be a fixed amount in a different currency. The amount of the deductible is usually set by the insurer, but the consent of the insured will also be required. The contract must always be read carefully, regardless of the amount in question.

Unconditional CASCO franchise

An unconditional deductible under an insurance contract involves a reduction in the amount of payment, regardless of the amount of damage caused. Since the unconditional deductible works a little differently, its size will be minus the amount of damage. An unconditional deductible in insurance is a reduction in the amount of payment by the amount of interest, regardless of the harm caused.

Unconditional CASCO franchise

An unconditional CASCO franchise is one of the most common types of franchise. Using it in auto insurance is an opportunity to purchase a policy at a discount. If the car owner chooses a CASCO policy with an unconditional deductible, then he will be liable in the event of an insured event, as well as independently cover the costs within a specific amount. The loss of the unconditional risk deductible will be assessed at an amount that covers the amount of insurance. In this way, the insurance company can compensate for the difference.

Unconditional risk deductible

Those who insure a car with an unconditional deductible can save quite a decent amount. We are talking about an amount of up to 70% of the total cost of the insurance policy. At the same time, you need to understand that several insurance situations can occur in one insurance period. In this case, the financial costs of insurance payments may significantly exceed the amount that was saved during the purchase of the policy. CASCO car insurance also uses a conditional deductible. This means that the insurer will fully compensate for the damage if its amount exceeds the conditional deductible. If its amount is enough to restore the vehicle, then the costs are fully borne by the insured.

In CASCO insurance, the franchise will be beneficial in the following situations:

• The driver has experience of accident-free driving for a long time;
• The goal of the car owner is to keep the cost of the policy as low as possible.
• It is more profitable for the car owner to cover minor damage himself than to go through a lengthy procedure for registering an insurance situation in order to receive insignificant compensation.

Unconditional aggregate franchise

As mentioned above, there are several types of franchises. One of the types is an unconditional aggregate franchise. This type of franchise belongs to the category of annual. Its main difference is that it is established not for each insurance situation, but for the totality of various cases that have occurred over a certain period. The amount of insurance compensation depends on how the amount of insurance payment will be determined.

Franchise conditional and unconditional

The sum insured can be both aggregate and non-aggregate. If we are talking about the aggregate amount, then the amount of total payments will be limited for the entire period while the agreement is in effect. If an insured event is reimbursed, the next time the amount for this risk will be reduced by one amount of payment. The contract with the aggregate amount will be recognized as executed after the amount of the sum insured becomes equal in aggregate with all payments made. The choice of the sum insured depends on certain types of insurance and on what needs the policyholder puts forward.

Car insurance under CASCO is becoming more widespread, especially in cases of purchasing a new car through car dealerships. This fact is due not only to the convenience of the insurance service itself and its cost, but also to the fact that banks issuing a car loan make it a necessary condition for obtaining compulsory CASCO insurance of the purchased car for the entire lending period.

Despite many of its advantages, this type of insurance retains its main drawback, which is expressed in its high cost for the average consumer. The average cost of an annual CASCO policy is about 10% of the price of a car, which is a fairly substantial amount with a constant upward trend in prices for new cars. This alone holds back most motorists in an effort to insure their car against various risks.

Against this background, more and more car owners are beginning to be interested in what is a franchise in car insurance in a general sense, and more specifically, what is a franchise in CASCO insurance . This service provides the buyer with an opportunity to receive a significant discount on the purchase of an insurance policy. How profitable it is, when you can use this service and how to pay for it - we will try to find out these questions in the following material.

What is a deductible for car insurance under CASCO?

A franchise, as a way of providing benefits for doing business, has found its application in the insurance system. So in CASCO, the use of a franchise is such an insurance option when, for providing benefits for purchasing a policy, the client insuring his car (franchisee) must assume a certain share of the costs of restoring a car damaged as a result of an insured event. Thus, the insurance company (franchisor) reimburses the sum insured not in full, but only in part.

To make it more clear what a deductible is in car insurance for CASCO, the following example can be given. Let the client decide to insure his car, the price of which is 500,000 rubles, against accidents under an unconditional franchise in the amount of 20,000 rubles. Then, under the terms of the contract, when assessing the cost of damage caused as a result of an accident in the amount of up to 20 thousand rubles, he is obliged to restore the car at his own expense and insurance will not be paid. If the repair cost is estimated at 70 thousand rubles, then the insurance company will pay only the amount that exceeds the established threshold, i.e. 50 thousand rubles, and the balance of 20 thousand rubles. the client pays.

Video: Casco insurance franchise

So, the main idea of ​​a deductible for CASCO insurance is as follows: the greater the amount of the deductible threshold set, the greater the benefit provided to the client when purchasing a policy. In this case, the franchise threshold can be defined as:

1. specific amount;
2. percentage of the value of the car;
3. or the value of the damage caused to him as a result of an insured event.

The amount of the discount provided for the purchase of a policy in each insurance company can be set individually and vary greatly, but mainly it is determined in the amount of double the amount of the deductible threshold.

Franchise options for CASCO insurance

There are several main types of franchising in CASCO:

1. Conditional franchise

The meaning of this insurance option is to set a fixed amount of damage caused in the event of an insured event. If the damage incurred does not reach the established threshold, then the policyholder fully restores the car at his own expense. If the damage assessment showed that the cost of the repair exceeds the established threshold, then the restoration is fully paid by the insurer, and the insured does not take any part in financing the repair.

For example, if a CASCO agreement is concluded under a conditional franchise with a threshold of 5,000 rubles, then in case of a minor accident with damage of 4,900 rubles, the owner of the car pays for its repair from his own pocket. If the damage is estimated at 5100 rubles, then the restoration of the car falls entirely on the shoulders of the insurance company.

The conditional franchise option is undoubtedly a profitable form of car insurance for the car owner, but in practice it is quite rare. This is due to the fact that in this option, fraud on the part of the insured is not excluded, when he specifically damages the car in order to bring the amount of damage to the limit established by the contract in order to shift the repair onto the shoulders of the insurance company. Therefore, insurers try to avoid such an insurance model.

2. Unconditional franchise

This insurance option involves the mandatory participation of the car owner in its restoration by paying the full or partial cost of the repair. The part of the restoration costs that is paid by the owner can be expressed as a fixed amount, as a percentage of the value of the machine or the damage caused.

Example: a fixed unconditional franchise for 10 thousand rubles. In this case, if the damage as a result of an insured event is less than this amount, then it is paid at the expense of the car owner. If the damage is greater, for example, 30 thousand rubles, then the car owner will pay 10 thousand rubles, and the insurance company will pay 20 thousand rubles.

The difference between an unconditional deductible and a conditional deductible is that the insured always pays out of his own pocket part or the full cost of the repair, depending on the ratio of the estimated damage and the deductible threshold established by the contract.

When setting the deductible threshold as a percentage of the cost of the car, the depreciation of the car is taken into account. In this case, the deductible amount (a threshold amount determined as a percentage) decreases over time in proportion to the value of the car.

If the CASCO agreement is concluded under an unconditional deductible, expressed as a percentage of the cost of the damage caused, then the owner of the car will pay for a strictly fixed part of the restoration repair in each insured event. For example, with a 10% deductible from damage estimated at 50,000 rubles, the car owner must pay 5,000 rubles to the repairmen, and the insurance company - 45,000 rubles.

3. Dynamic franchise

This insurance option involves taking into account the history of impeccable driving of the insured. The less insured events are listed for the client in previous periods of insurance, the greater the confidence in him on the part of the insurance company, the greater the discounts and bonuses offered for the purchase of the policy. A dynamic deductible encourages policyholders to drive without accidents, since a high percentage of insurance is paid to them only for the first and second insured event, and for each subsequent insured event, the share of insurance compensation is consistently reduced by 5%.

4. Temporary franchise

This insurance option allows the client to choose the time period of the insurance contract. For example, if the owner of the car uses it only on weekdays, then he can conclude a CASCO agreement with a temporary franchise, valid for 5 working days a week. If damage to the car occurs during these days, the insurance company will fully compensate for its repair. If the accident occurs on weekends, the repair is carried out by the owner at his own expense, and the insurance company does not pay insurance. Such a system allows to reduce the cost of the policy for the client in comparison with the standard system.

There may be other franchise options for CASCO insurance. For example, options for providing benefits through a deductible in CASCO provide for the payment of a limited amount of the sum insured only if the insured himself is the culprit of the accident. In this case, the cause of the accident should not be a malicious violation of traffic rules. If the accident in which the policyholder's car was damaged was caused by the fault of another person, then the resulting damage is reimbursed by the insurance company in full, excluding the deductible.

Video: Ways to save on CASCO - Method 1: Franchise

Who benefits from a car insurance franchise?

1. For insurance companies

The deductible allows the insurer to get rid of payments for minor damage to the car when the amount of damage does not exceed the deductible threshold. The essence of saving money and time for the insurance company here is that, regardless of the amount of payments, the insurer has to launch the entire cycle of the bureaucratic mechanism of investigation, damage assessment and financial movement, which requires certain material costs, which in some cases may exceed the amount of insurance payments made. Therefore, it is unprofitable for insurance companies to investigate and pay small sums insured. It is important for them to have fewer insured events with a stable flow of insurance premiums.

2. For transport owners - insurers

Franchise for the insured can be both profitable and disadvantageous. It all depends on the specific franchise insurance options, the experience and qualifications of the driver, the driving mode and many other factors. The benefits of an unconditional franchise for policyholders are:

• Saving time and money due to the fact that you do not need to contact the traffic police and the insurance company for minor damage in order to obtain insurance and make repairs. This point applies mainly to the unconditional franchise. These procedures may take too long and additional costs that are not beneficial to the insured himself, and the insurance received may not be worth such sacrifices.
• A significant discount on the purchase of a policy, the higher the deductible threshold, the cheaper the insurance policy. Careful accident-free driving will significantly reduce the cost of car insurance compared to the usual CASCO option. For an accident-free driver, insurance companies offer a system of progressive discounts, when the cost of the policy will decrease annually.
• Often caused minor damages are not fixed in the history of the insured, and it is considered accident-free. Therefore, a new policy can be purchased at an even greater discount.

Franchise Disadvantages

The main disadvantages of CASCO insurance with a franchise include:

• Unavailability of this form of insurance for cars purchased on credit. The fact is that lenders are interested in keeping the value of the pledged car unchanged, but they cannot be sure that the borrower will independently restore various minor damages that reduce the market price of the car. In addition, the cost of the policy for the entire period of lending is paid by the lender, and the franchise is unprofitable for them.
• There is a possibility of underestimation of the damage caused by the specialized service centers of insurers in order to avoid insurance payments on the basis that the amount of damage does not reach the deductible threshold.

When is it better to choose insurance with a deductible?

1. In the presence of finances for the production of minor repairs on their own and means.
2. Minor accidents with minor damage are common, especially for novice drivers. They worsen the driving history and become a reason to increase the price of the policy for the next year. Therefore, the franchise helps to avoid such a rise in price in cases of minor accidents.
3. If you have extensive experience and experience of accident-free driving, when the driver is sure that he will not be the culprit of the accident.
4. A CASCO contract for the risk of damage, concluded for a large deductible amount, may contain insurance against theft, theft or destruction as a bonus, which may be beneficial for a certain category of car owners.

Video: CASCO calculation - cheaper insurance policy through a franchise.

How to calculate the franchise?

To do this, you need to proceed from three main values ​​\u200b\u200bspecified in the insurance contract:

• franchise type;
• the amount of the franchise;
• insurance amount of the contract.

For example, we have the initial data:

• sum insured - 1 million rubles;
• the deductible amount is 0.5% of the sum insured, which is 5,000 rubles.
• If it is given as a percentage of the damage, then let it be equal to 20%.

In this case, two calculation options are possible:

1. A deductible or conditional type of calculation, when the deductible is deducted from the estimated amount of damage. With a loss of 20 thousand rubles, the insurance payment will be 20,000-5,000 = 15,000 rubles. If the damage is less than 5000 rubles, insurance is not required.
2. An unconditional type of calculation, when the deductible amount is determined as a percentage of the amount of damage and amounts to 20,000x0.2 = 4,000 rubles. The amount of the insurance payment will be 20000-4000=16000 rubles. The remaining 4,000 rubles is paid by the insured to the repairmen himself.

Thus, the franchise is designed to reduce the cost of the insurance policy and is beneficial to the client when there is a need for car insurance. However, in order to receive insurance in the event of an insured event, you need to keep a “cold head” in order to fulfill all the conditions that are discussed in the contract for receiving compensation.

Going to an insurance company to insure a car against damage and theft, each car owner should familiarize himself with the term "franchise", which insurers love to include in the CASCO contract. In order not to be misled by professionals from marketing and insurance, arm yourself with objective information.

Most often, insurance agents talk about the benefits that the client will receive by agreeing to include a franchise in the policy, and forget to provide the insured with full information about all the nuances that he will face. Therefore, do not blindly trust the words of insurers. Our review will tell you about the pros and cons of the franchise, giving the insurer the opportunity to make the right choice on his own.

What is a franchise?

A deductible is a sum of money that will not be paid to the insured in the event of an insured event. It can be expressed in absolute terms - rubles, dollars, or a percentage of the sum insured under the contract. The deductible, as well as its size, is predetermined in the CASCO insurance policy by agreement between the client and the insurance company.

By agreeing to include the franchise in the contract, the policyholder receives a discount on the cost of the CASCO policy. There are two types of deductibles: conditional (non-deductible) and unconditional (deductible).

Conditional (non-deductible) deductible means that all payments exceeding its size are fully compensated by the insurer, and in this case it is not "deducted" from the amount of insurance compensation. However, if the restoration of the car after a minor accident or illegal actions of third parties requires a small amount within the conditional deductible, the insurer will not pay anything to the beneficiary. This means that with a conditional deductible of 10,000 rubles, damage that requires up to 10,000 rubles to repair will not be restored at the expense of the insurance company. At the same time, if the amount of damage is 12,000 rubles, that is, if it exceeds 10,000 rubles, the insurers will compensate it in full. In fact, this option is almost ideal for the insured, but at the same time, it is not so beneficial for insurers. Therefore, the conditional deductible is rarely used in auto insurance contracts today.

Unconditional (deductible) deductible always deducted from the payout amount. In any insured event, the beneficiary will receive compensation from the insurer minus the unconditional deductible established in the contract. In other words, an unconditional deductible of 10,000 rubles means that all insurance payments under the policy will be made each time minus 10,000 rubles. It is more often used by insurance companies, as it is more profitable for them than conditional. The deductible deductible is less attractive to unscrupulous insurers who want to deceive the insurance company.

Before deciding whether to include a deductible in an insurance contract or refuse it, you need to understand what practical role it will play for you.

Benefits of franchise insurance

Considering that the conditional (non-deductible) deductible has not found wide practical application in CASCO agreements among Russian insurers, it is worth talking about the features of the unconditional (deductible) deductible. As a rule, representatives of insurance companies do not even talk about the type of franchise, using the word "franchise" without any additions, while they mean an unconditional franchise.

There is no single answer to the question of whether a franchise is beneficial to a car owner. It depends on the specific situation, in which the needs, opportunities, driving experience of the insured and other nuances play an important role. Depending on them, a franchise can become an advantage or disadvantage of an insurance contract. To begin with, let's find out what positive aspects are fraught with an unconditional franchise.

• Savings on a voluntary car insurance policy. When an unconditional deductible is included in the policy, its cost can significantly decrease for the insured. In this case, there is usually a dependence - the larger the deductible, the cheaper the insurance policy (you can estimate the cost of insurance for different franchises on the online Casco calculator). However, having included a deductible in the policy, you should be prepared not to apply to the insurer for payments for minor damages, but in case of serious insured events, receive compensation minus the deductible amount. For example, if the sum insured under the CASCO agreement is 500,000 rubles, any payment for you will decrease by 7,500 rubles with a franchise equal to 1.5%. In this case, any losses within this amount will not be compensated to you in principle.
• Saving time due to the refusal to apply to the insurance company for minor insured events. Concluding an insurance contract with a franchise can be an advantage for those who do not plan to contact the insurance company for every scratch and small chip on the body. Most often, when an insured event occurs, the insurance company needs to provide a certificate of an accident from the traffic police or a document on illegal actions of third parties from the police department, fill out several applications, and provide a car for inspection by experts. These actions require a lot of time, effort and nerves, especially considering the possibility of waiting in lines at each office. By establishing a franchise, the insured automatically wins the time that he would have to spend on paperwork in cases where "the game is not worth the candle."

In what cases is it worth insuring with a franchise?

Before including an unconditional deductible in the contract, you need to make sure that such a decision will not nullify all the benefits of your CASCO insurance. Some drivers should not even think about a franchise, while for others it is a tempting and profitable offer. If, after reading the following points, you understand that they are directly related to you, a franchise may be beneficial to you.

• The availability of free funds for the independent implementation of minor repairs. By including a small deductible (0.5-2 percent of the cost of the car) in the CASCO contract, the insured must be financially prepared to repair the car on his own in case of minor damage. It should be noted that the money saved when buying CASCO on a franchise, as a result of the discount received, will just be spent on minor repairs. However, according to the theory of probability, an insured event may not occur during the term of the contract. Then the savings on CASCO is obvious.
• The presence of a long experience of accident-free driving and confidence in driving skills. If the policyholder's driving experience is more than 15-20 years, he feels like a fish in water while driving, then the deductible established in the CASCO insurance contract will not be superfluous, and, most likely, will help save money. The probability of an insured event always exists. However, if the driving style of the insured is safe and this has been proven by many years of positive experience, the franchise most often helps to save part of the budget due to a significant discount on CASCO, and at the same time feel protected from car thieves and major accidents on the road.
• The desire to insure the car only at the risk of "Theft". Full CASCO includes two risks: "Damage" and "Theft". If the policyholder initially planned to buy a policy only against theft, since he is confident in his driving skills and does not attach importance to minor damage to body elements, then a good alternative solution would be to issue a full CASCO with a large deductible (7 or more percent of the cost of a car) by the risk "Damage". Not all companies can insure a car only against theft, so insurance with a large deductible is an option if you do not want to change your insurer, but at the same time it does not insure cars only against theft. In addition to the theft protection, a policy with a large deductible will help you receive compensation in the event of a tatal (complete loss of the car) or major damage as a result of an accident.

In what cases should you refuse insurance with a deductible?

According to the practice of settling insured events, the deductible is unprofitable for those who, according to statistics, get into an accident more often than others and apply to the company with an application for payment. As a result, the initial savings on the cost of CASCO turns into multiple unforeseen expenses for car repairs. Young drivers and anyone who is insecure behind the wheel can lose out on deductible insurance protection. Those drivers who are just starting their journey behind the wheel of a car often do not need to issue a CASCO with a franchise. It is safer to pay the insurance company for the policy the full price, taking into account all the multiplying factors and be sure of your insurance protection. As practice shows, minor accidents can occur with inexperienced drivers several times a month. This is especially true for drivers - women and men who have received a license after 40 years. With an increased risk of insured events, it is better to calculate CASCO at the full rate.

So, a small unconditional deductible (0.5-2% of the cost of a car)- ideal for experienced drivers who, most likely, will not contact the company about minor repairs or consider that it is more profitable to carry it out on their own in order to avoid paperwork. Large unconditional franchise (more than 7%) will be useful for policyholders who want to protect their car from theft, total (total loss) or serious damage in an accident. You should not blindly trust the advice of insurance agents on the inclusion of a deductible in the policy (better read the CASCO rules and

Franchise in insurance- Today, a fairly common phenomenon and is used by many insurance companies. As a condition of the contract insurance franchise usually negotiated at the stage of signing documents.

CASCO with a franchise - what is it?

Until 2014, this institution did not have a clear definition in Russian legislation and was applied only in practice.

It turns out that since the adoption of the law "On Insurance", that is, more than 20 years, the terms of the franchise have not been enshrined in any regulatory legal act. And only from 01/21/2014 the corresponding changes were made - now the franchise in insurance has become a "new" resource of insurance law.

Under insurance franchise imply a part of the amount that can be determined either in the contract or in the law, not subject to reimbursement by the insurer to the insured and set either as a fixed amount or as a percentage of the sum insured.

In other words, without insurance franchises the contract can be concluded, as it is not a prerequisite. In simpler terms, the deductible is the amount that, upon the occurrence of an insured event, the client (insured) must compensate on his own.

What is a franchise used for?

So, what is a franchise at CASCO? You decide to insure your car under CASCO and choose the insurance option in the amount of 300,000 with a deductible of 10,000. You get into an accident, as a result of which the damage caused to your car is 2,000 rubles. But the insurance company won't pay you anything. Shocking?

Let's understand in more detail what kind of animal this is - CASCO with a franchise.

Sometimes the amount of damage in an accident is insignificant, but the hassle about paperwork and contacting the insurance company takes quite a lot of time; therefore, experienced drivers try to meet insurers as little as possible.

With a deductible, you save a lot on the amount of insurance. This option is suitable for those who have recently received rights. As a rule, the amount of the insurance policy for beginners is significantly higher than for professionals, therefore, by including a franchise clause in the insurance contract, they will significantly reduce the amount of the insurance policy. Moreover, for the owner of an expensive car, the franchise option will also come in handy for the same reason.

But the insurance companies are not foolish either; therefore, not everything can be insured as a result of the inclusion of a franchise clause in the contract. In particular, this will apply to cars that are pledged to the bank.

But sometimes the franchise is not needed by the insurers themselves. For example, you are a beginner and understand that minor accidents are inevitable (when parking, when leaving, etc.), so it is not profitable for you to constantly cover minor damage yourself, even if you save on insurance premiums. Although in this case everything will depend on the conditions that the insurer will offer you.

You should also pay attention to what additional services your insurance provides. For example, if we are talking about a free tow truck in case of an accident, then it is not profitable for you to apply for a franchise, since if the amount of damage is less than the franchise amount, the tow truck will not come to you for free.

Types of franchise in insurance

A franchise can be of 2 types:

1. Conditional. In this case, the insurer is completely exempt from payments if they do not exceed the amount stipulated by the deductible. But if we are talking about a larger amount than the deductible, then the insurer is obliged to pay this difference.

   Example: the car is insured for 4,000,000, the deductible is 5%. The deductible amount is 200,000. In case of an accident with damage of 50,000, the insurer does not make payments, everything is covered by the insured; but if the amount of damage is 350,000, then the entire amount of damage is paid to the insured, regardless of the difference between the damage and the amount of the deductible.

2. Unconditional. In this case, the amount of payments is determined as the difference between the amount of losses and the amount of the deductible.

   Example: the car is insured for 4,000,000 with a deductible of 5% of the amount of payments. That is, when calculating, we find out that the deductible will be 200,000. An accident occurs, as a result of which the insured was harmed by 150,000 rubles. The amount is less than the deductible, respectively, should be covered by the insured. But if the amount of damage was, for example, 250,000, then the insurer was obliged to pay you 50,000 (250,000-200,000).

As a rule, insurance companies choose an unconditional deductible.

In addition to the above types, in practice you can meet the so-called dynamic franchise. The meaning of this subspecies is that the size of the franchise (percentage of payments) may vary depending on various situations; for example, on the number of insured events, etc. That is, with the first insured event, the deductible is not paid, with the second - 5% of the sum insured, etc.

You can not ignore the relatively new type of franchise in insurance - temporary franchise. The deductible is not paid if the period of occurrence of circumstances that may lead to an insured event is less than that specified in the contract.

Benefits for the client when using a franchise in insurance

In fact, if you take a closer look at the institution of a franchise in insurance, you can highlight the obvious advantages for the insured:

• Renewal discount if you were not reimbursed for losses at the time of the old insurance policy.
• Saving time.
• If we are talking about, for example, a motor third party liability insurance contract, then such savings on premiums in the event of driving without an accident encourages the driver to comply with traffic rules.
• If there are no insured events, then you contact the company less and get less negative experience.
• Even if the insured event has not occurred, you do not "lose" the entire amount of insurance; a certain amount is returned to you in the form of a discount on the next insurance.
• Insurance premium savings. The following relationship is observed: the higher the deductible, the lower the insurance premium paid by the insured. In this context, the franchise will be beneficial for those who enter into a collateral insurance contract. It is beneficial for the bank that your property be insured for as large a sum as possible, and you, in turn, will benefit by paying less for the insurance premium.

Nuances of a franchise in insurance

When you enter into an insurance contract and the insurer offers you to pay a relatively small insurance premium, find out the amount of the deductible. It is possible that you will sign a “dead” contract from which you will not receive any payments. Be careful and read all the terms of the agreement, even those in small print!

In addition, specify immediately on what conditions the franchise will be paid and what documents are required for processing and receiving payments in this case. It often happens that the necessary documents were not drawn up at the scene of an accident, and then it’s too late to wish for it, but, despite this, the insurer does not make a payment.

If you are going to continue to cooperate with this insurance company, specify what bonuses you are entitled to if you do not use the deductible during the period of the insurance policy. Of course, you are not stingy, but you should know your benefits. The insurance market is crowded, so it is quite possible that you will be able to find better conditions when concluding an insurance contract with a franchise.

The franchise has not yet "taken root" properly in the practice of insurance, so many insurers are wary or generally opposed to the inclusion of this condition in the contract. But it's up to you: what is more profitable - to get a discount on the insurance premium or to receive payments in any insurance cases, regardless of the amount of damage.