Auto insurance and franchise: is there any benefit? Franchise in insurance.

Mikhail Adamov

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The word "franchise" has a foreign origin. Not everyone understands it, however, you need to navigate the topic, because today the franchise is widely used in auto insurance. Is it good for car owners? A question that needs some clarification. Let's try to figure out what are the features of a franchise in car insurance, its main types, advantages and disadvantages in car insurance under CASCO. An approximate calculation of the size of the franchise will help to understand the essence of the subject.

What is a franchise in insurance - explained in simple terms

The activities of insurance companies are inextricably linked with the franchise. It is used in almost any insurance product, and auto insurance is no exception. Franchise is translated from French as a benefit. If we consider the deductible in relation to insurance, then this is a certain part of the damage that is not reimbursed by the insurer. It is called the irreparable part of the damage. All the nuances must be spelled out in the property insurance contract.

In simple terms, the deductible is part of the insurance payments, which the client voluntarily waives if the insured event does occur. When is the franchise amount determined? When issuing an insurance policy. This may be a specific amount expressed in rubles, or a percentage of the insurance payment. A simple example: the car was damaged in an accident - it suffered damage, insurance compensation is calculated - the amount of damage is estimated, the deductible is deducted from the total amount of damage. The amount received is paid to the insured.

The Russians strive to avoid it with all their might. In the understanding of our citizens, this is something superfluous and unnecessary. In fact, this is a real opportunity for savings. With a small deductible, the damage is fully covered, but in this case there will be a high insurance rate. With a large deductible, the opposite is true: incomplete coverage of the loss at a lower cost of insurance.

Types of franchise for auto insurance - the difference between conditional and unconditional

Auto insurance franchise can be of two main types: conditional and unconditional.

1. What suggests conditional franchise ? If the damage caused to the car exceeds the amount of the deductible, the insurer will reimburse it in full. If the loss did not exceed the amount of the deductible, then the insured does not receive any payments from the insurance company. Thus, the owner of the car is either not compensated for the damage at all, or is compensated for 100%.
2. Unconditional Franchise assumes that the insured always covers independently a certain part of the loss, that is, part of the damage will not be reimbursed to him by the insurer. The amount of compensation will be less by deducting the deductible, which can be expressed in two ways: have a fixed amount or as a percentage of the damage.

To understand how each type of deductible in insurance is actually applied, a table that clearly demonstrates the amount of compensation with the same initial data and the same amount of damage will help:

New deductible options are emerging in auto insurance. For example, the unconditional view is used in the dynamic version. It takes effect when damage occurs a second time. The contracts indicate that the size of the deductible increases with the occurrence of each new insured event. It looks something like this:

• In the 1st case, the dynamic deductible is 0% (full refund).
• At the 2nd - 5%.
• With the 3rd - 10%.
• At the 4th and further - up to 40%.

Another variation is the preferential franchise. There is no exact term yet, the name may be different. What is the point? The contract fixes cases to which the franchise does not apply. Suppose if it is established that there is no fault of the insured in the accident. This means that there will be no deductible deductible when calculating payments.

Pros and cons of franchise insurance when insuring a car under CASCO

Car insurance has long been a must for vehicle owners, especially for new or loan cars. The CASCO policy is widely used in Russia. This is a convenient insurance product, although it also has its pros and cons, which are constantly discussed in information sources.

The most significant point for this type of insurance is the high cost, which is constantly increasing against the general background of an increase in the cost of new cars.

The cost of CASCO insurance for the year is 10% of the price of the car. Agree, a lot of money. That is why car owners began to seriously consider an unconditional franchise from CASCO. In this option, the price of the insurance policy will have a significant discount. Here is your advantage. Is it profitable and what does the car owner “sacrifice”?

Having CASCO insurance, a person counts on compensation for any damage caused to the car, their degree does not matter. The insurer will pay anyway. If CASCO insurance is issued taking into account the deductible, then a clearly defined amount is implied, which is not paid by the insurer in the event of damage. The policy is cheaper by this amount.

Franchise insurance completely transfers the costs of eliminating minor damage to the shoulders of the insured. If the damage is large, and it exceeds the deductible, then the insurer connects and pays the damage.

Cons of CASCO insurance using a franchise:

• This type of insurance practically unavailable for credit cars. The bank is interested in the safety of collateral, which is a car. However, there is no guarantee that the owner will deal with minor damage, such as scratches, broken glass, and so on.
• In addition, when buying a car on credit, the cost of CASCO for the entire loan period (3-5 years) is paid by the bank. It is the lender who transfers the cost of the policy to the insurance company, This means that franchising is simply not possible.
• Another disadvantage is sometimes insurers refuse to pay out, arguing that the amount of damage does not exceed the deductible. Loss assessment is a relative matter, each service center has its own criteria. Therefore, often the cost of repair work is deliberately underestimated by representatives of the insurer. If the owner turns to other specialists, then there is a chance of getting a larger bill.

It is important for buyers of CASCO insurance with a franchise to understand one nuance.

Small losses that often occur do not affect the payments in any way, therefore, they are not recorded in the insurance history, which means that the driver’s driving is considered breakeven.

For this reason, the insurer has no reason to increase the cost of the next contract; moreover, a new policy can be purchased at a discount.

How to calculate deductible for auto insurance correctly

For the correct calculation of the deductible for auto insurance, you need to rely on three parameters specified in the contract. These are the sum insured, the deductible percentage and the type of deductible chosen.

Let's look at an example. Initial data:

• The amount of insurance is 1,000,000 rubles.
• The deductible is 0.06% of the insurance amount. This means that the franchise amount is 1,000,000 × 0.06% = 600 rubles.
• The deductible can be a percentage of the amount of damage, let's say 20%.

The calculation of payments will depend on the type of franchise and the amount of damage:

1. Option number 1. Most often, the unconditional type (subtracted) is used, in which the amount of the deductible is subtracted from the amount of damage. Suppose the damage was estimated at 2000 rubles. The company will pay the client 1,400 rubles (2,000 - 600). If the damage amounted to 300 rubles, then the insured is not entitled to compensation - there is no excess of the deductible.
2. Option number 2. Unconditional view (in percent). Suppose the damage was estimated at 2000 rubles. The company will pay the client 1,600 rubles (2,000 - 20% = 1,600). If the damage amounted to 300 rubles, then the insured is entitled to 240 rubles (300 × 20% \u003d 60).

Of course, a third option is also possible - a conditional franchise. However, it is practically not used for car insurance. The reasons are simple and banal. Cases of fraud on the part of insurers who tried to increase a small loss “artificially” in order to receive a full payment (100%) have become more frequent. It is this type that is considered the most interesting for car owners.

Today I will tell you about what is insurance franchise. Once I already wrote about what it is, so I’ll immediately make a reservation that these are completely different concepts that have nothing at all in common except for the name: you don’t need to compare and confuse them in any way. So, a franchise in insurance - what is it in simple words: you will learn about this by reading this publication.

What is a franchise in insurance?

Any insurance contract or insurance policy, regardless of what kind of insurance product we are talking about, contains a number of important conditions that the policyholder must pay attention to without fail. So, one of these conditions is the franchise or the size of the franchise. What it is?

Franchise in insurance is the amount of insurance compensation that will not be paid to the beneficiary upon the occurrence of an insured event.

In other words, if the insured himself is the beneficiary, he will not receive part of the reimbursement stipulated by the franchise, and if the beneficiary is a third party, then the insured will have to independently cover his losses within the franchise.

The lower the deductible under the insurance contract, the higher the insurance rate, and vice versa, which is logical. With a zero deductible, that is, with its complete absence, the insurance rate is always the maximum.

A franchise in an insurance contract can be stipulated in two ways:

1. In absolute terms(for example, 1000 rubles, 10000 rubles, etc.);
2. As a percentage of the sum insured or the amount of the loss caused(for example, 3% of the sum insured, 1% of the amount of damage, etc.)

Conditional and unconditional franchise.

In addition, the deductible in insurance can be of two types: conditional and unconditional.

Conditional franchise means that if the calculated amount of damage does not exceed the amount of the established deductible, then the insurance payment will not be made at all, and if it exceeds this amount, then the payment will be made in full, without deducting the amount stipulated by the deductible.

Unconditional franchise means that the amount provided for by the deductible is in any case deducted from the amount of the insurance indemnity and is not paid.

In practice, insurers most often use the unconditional franchise; the conditional franchise is now used extremely rarely, especially among domestic insurers.

When concluding an insurance contract or buying an insurance policy, it is necessary to very clearly find out not only the amount of the deductible, but also the method of its calculation, as well as the type: conditional or unconditional deductible.

Examples of the application of a franchise in insurance.

To make it clearer what a franchise is in insurance, let's look at a few examples.

Example 1 . The insurance contract indicates the sum insured is 100,000 rubles, the size of the unconditional deductible is 2% of the sum insured.

There was an insured event, the amount of damage was estimated at 1500 rubles. The beneficiary does not receive any payment at all, because. the amount of damage is less than the established deductible (2000 rubles).

There was another insured event, the amount of damage was estimated at 5,000 rubles. The beneficiary will receive a payment of 3,000 rubles (5,000 - the franchise amount is 2,000).

Example 2 . The insurance contract indicates the sum insured is 100,000 rubles, the size of the conditional deductible is 2,000 rubles.

An insured event occurred, a certain amount of damage amounted to 1800 rubles. The beneficiary does not receive any payment because the amount of damage is less than the established deductible.

There was another insured event, the amount of damage was estimated at 5600 rubles. The beneficiary receives the entire amount of the calculated damage - 5600 rubles, because It's a conditional franchise.

Example 3 . The insurance contract indicates the sum insured is 100,000 rubles, the size of the unconditional deductible is 3% of the amount of damage.

There was an insured event, the damage was estimated at 10,000 rubles. The beneficiary will receive a payment of 10,000 - 3% of 10,000 = 9,700 rubles.

Some types of franchise in insurance.

Dynamic Franchise- this is one of the varieties of unconditional deductible, the amount of which can change during the validity of the insurance contract. It always changes upwards, that is, the more insured events occur, the less the beneficiary under the contract will receive with each case.

It often happens that for the first insured event an unconditional deductible of 0% (0 money units) is set, that is, it simply does not exist. But for the second, for example, it is already 5%, for the third - 10%, for the fourth - 15%, etc. This is a dynamic franchise.

Preferential franchise- another type of deductible in insurance, in which the deduction of the specified amount from the compensation is not applied under certain circumstances (so-called benefits). Well, for example, in auto insurance, if the insured is to blame for an accident, the deductible applies, and if the other party does not apply. This is an example of a preferential franchise.

Recourse franchise- a type of deductible in insurance, in which, in the event of an insured event, the insurance company first pays the beneficiary the full amount of the calculated damage, excluding the deductible, but then the insured is obliged to reimburse the insurer for part of this payment in the amount of the established deductible.

Mandatory franchise- a condition of the contract, under which, when prolonging the contract for a new term, the deductible is established without fail, if during the previous period insured events occurred and payments were made.

Why do you need a franchise in insurance?

So, a franchise is a kind of financial instrument that allows an insurance company to reduce its risks and minimize the cost of paying insurance claims. However, her income in this case also decreases, because. the insurance rate in the case of a franchise is always lower.

At first glance, it seems that a franchise is a tool that is necessary only for insurers, which serves only to protect their interests. However, in the application of a franchise, if desired, you can find many advantages for policyholders.

Firstly, this is the same lower tariff and choice. Usually, the policyholder is offered a certain tariff and deductible grid, from which he can choose the option that suits him best.

If all insurance contracts were concluded without a deductible, they would cost significantly more!

Secondly, upon receiving the minimum damage included in the franchise, the insured is relieved of the need to go through a complicated (for our conditions) procedure for collecting and submitting documents for reimbursement, wasting his time and effort on this.

From all this we can conclude the following:

Receiving compensation for small losses, in fact, is unprofitable for either the insurer or the insured. Therefore, a franchise was invented, which is successfully used in the world insurance practice.

Now you know what a deductible is in insurance, a conditional and unconditional deductible, what other types of deductibles exist, and how this tool is used in practice. Be vigilant when concluding insurance contracts and carefully study all the points regarding the franchise. By the way, in some cases they may not be specified in the contract/policy itself, but in certain insurance rules with which the client is supposedly familiar, as evidenced by his signature on the contract.

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There is such a thing as a franchise. At present, disputes are actively developing regarding the level of benefit of the proposal. It is important to understand that the degree of profitability is assessed on an individual basis, because the franchise is presented in different ways in the contracts being drawn up.

The essence of the concept of a franchise

A deductible is a part of the damage that will not be paid out upon the occurrence of insured events by a specialized organization. In most cases, when drawing up a contract, the interests of each party are taken into account. Although the franchise benefit is related to the insurance company, the client's interests are still taken into account. For this reason, before the potential occurrence of insured events, the boundary for the subsequent payment of compensation is determined. Such an agreement speeds up and simplifies further cooperation between the company and its client.

What is a franchise? How profitable can this financial product be? The franchise has the following features that are revealed in its analysis:

• a certain part that will not cover the losses of the company's client in the event of an expensive insured event;
• a limit fixed as a percentage of the initial insurance amount;
• part of the amount of a certain amount that is subject to mandatory compensation;
• A franchise is not a prerequisite for cooperation in the insurance industry.

It is best to consider the proposed service with an example. So, according to the insurance contract, 15 thousand rubles are determined. After an accident for a smaller amount, there is no possibility of further compensation for damage. However, if the amount of damage caused is estimated at least 15 thousand rubles, the legal entity pays the entire amount to its client. Despite such an interesting approach to settling financial issues, one can note an advantage for the client: the cost of the purchased policy will be significantly reduced. Any franchise amount that is prescribed in the agreement must comply with legal requirements and an individual agreement.

Types of car insurance franchise

Today, the franchise is divided into several varieties, each of which has certain features, advantages and disadvantages. Without fail, the type of franchise used is entered in the text of the agreement.

1. Conditional. In this case, the insurance company focuses only on the established digital indicators in the agreement. In addition, the reverse situation is allowed: the amount of damage that exceeds the figures specified in the contract is a mandatory requirement for payment of the amount in full.
2. Unconditional. There is a mandatory deduction of the deductible amount, regardless of the amount of damage caused. For the client, the policy is offered in advance at a reduced price, so savings are guaranteed in the absence of traffic accidents.
3. Temporary. The franchise in this case is valid only for a certain period of time, which is indicated in an additional manner. A mandatory orientation to the date of the event and the duration of the franchise is provided.
4. High. Such a franchise is used in most contracts that are drawn up for expensive vehicles. The minimum financial threshold is one hundred thousand dollars. At the very beginning, the insurer reimburses the compensation. Subsequently, the insured pays the deductible amount. Under such a scheme, a high level of protection of the interests of each of the two parties is guaranteed.
5. Dynamic. The amount of the deductible becomes volatile. At the same time, the amount of compensation that is paid to the victim depends on the damage to the person and the car, debt, and the frequency of accidents.
6. Preferential. In this case, the franchise will come into force only under certain circumstances. The contract should clearly state the nuances of resolving financial issues, otherwise there is a serious risk of conflict situations.
7. Regressive. Provides for the payment of insurance compensation without taking into account the deductible. Thus, the injured client receives insurance in full. Subsequently, the policyholder returns a certain amount, which is specified in the contract.
8. Mandatory. The franchise becomes an integral part of new agreements if, under previous agreements, there were serious losses for specialists due to accidents or a major accident. To soften the terms of the extended contract, it is recommended to remember the rules of the road and make every effort to prevent accidents.

The type of franchise must be indicated without fail, since this largely determines how correctly it will be possible to resolve the subtleties of the existing relationship between the insurer and the client of the company.

Legislative regulation of the size of the franchise

The size of the franchise for the subsequent payment is regulated at the legislative level. As a result, the executed agreement acquires legal force and can be successfully used in many insured events. Sizes are regulated not only on an individual basis, but also by federal laws. In this regard, each of the two parties in any case is within certain limits. In most cases, the financial capabilities of the clients of the insurance company are taken into account, since the proposed additional product must be beneficial for each of the two parties.

Knowing what a deductible is when insuring a CASCO car or other policies, you should be puzzled by the amounts. The amount of potential damage is determined on an individual basis, but the starting point is ten thousand rubles.

Each type of car insurance has specific requirements. For example, when it is possible to use no more than two percent of the sum insured.

The maximum compensated sum insured cannot exceed 16,000 rubles. If the established indicator is exceeded, the culprit of the accident must allocate his finances to pay for the repair of the affected car of the second party. Taking into account the individual approach to determining the amount, the potential benefit should be taken into account. However, in order to form a correct opinion, it is recommended to evaluate the franchise in depth.

Benefits of a car franchise

The endless debate about the benefits of a franchise for insurance companies and their customers can still lead to a better understanding of the situation associated with car insurance. Proper execution of the contract guarantees a high level of protection for each of the two parties. Moreover, an equal degree of benefit is provided for those who are interested in the benefits of a car franchise. For an in-depth study of the additional product, it is recommended to carefully study the offer, both from the side of the driver and the insurer.

Positive aspects for the motorist

The main advantage is directly related to the protection of the insured. This is due to the absence of the need to expend effort, time and additional finances to interact with the insurance company in situations where you can handle it yourself. This approach guarantees prompt resolution of minor issues that arise after an accident without serious damage to the vehicle. The client of the insurance company receives an unusual discount. The policy is provided at a reduced cost, as a result of which it is possible to achieve savings.

It is important to consider the risk of a serious car accident. If the amount of damage is less than the established deductible, you will have to give up any benefits. This situation may arise if a large franchise is indicated in the contract being drawn up. If the driver is confident in the minimum risks associated with an accident, only the cost of the insurance policy will have to be paid. In this case, the opportunity to note the benefits associated with financial costs is guaranteed.

The most important detail is the size of the deductible to be established when applying for an OSAGO insurance policy. The amount must correspond to the financial capabilities of the client of the insurer. For this reason, the client is only entitled to give consent if the indicated payment is affordable for him in case of an unexpected traffic accident. At the same time, an important rule is taken into account: an increase in the size of the deductible leads to a decrease in the cost of the insurance policy.

The positive aspects of the franchise for clients of insurance companies are not always noted. The need for a responsible approach before signing the contract is foreseen:

• It is recommended to calculate the time intervals for using the franchise. This aspect is taken into account by a motorist who knows the peculiarities of using his car and the nuances of the financial situation. Solving money issues on your own always takes time. In this regard, it is necessary to calculate the time frame for self-payment of damage to the injured party and the approximate terms for the provision of official assistance from the insurer. Usually issues are resolved online, so the difference does not exceed 5 - 12 hours.
• Now you need to calculate the cost of an hour of time. For example, the monthly income is 60 thousand rubles. This amount is divided by 160 working hours (standard work time per month). Thus, an hour costs 562 rubles.
• It is desirable to take into account the peculiarities of lifestyle. Sometimes people, due to force majeure situations, which include road accidents, have to miss classes in the gym, swimming pool, fitness center. Such circumstances result in excess expense available for prevention. Perhaps it is best to independently resolve the issue with the injured party and quickly find a way out of the conflict situation.
• An understanding of human psychology should be taken into account. Sometimes it takes people a long time to resolve conflict situations. The franchise benefit is noted only after taking into account the chances of successfully resolving the issue on a personal basis without involving insurers, the life situation, and the level of wages.

Too little franchise does not carry any benefits. For example, 100 rubles is an amount that cannot even be considered when drawing up a contract. In this regard, it is recommended to carefully study the cost of various parts for cars and the price of their replacement, painting. The minimum financial investment is usually a thousand rubles, but this figure is typical only for minor accidents.

Benefits for an insurance company

Car insurance companies always evaluate their losses and profits. No client can fully assess the financial situation of a specialized organization, so the presence or absence of positive aspects cannot be assessed independently.

For example, in case of minor accidents, an insurance company must pay its client 1,000 rubles for a quick and cheap car repair. However, 2,000 rubles will be spent on processing the payment due to the specifics of the transfer of funds, existing commissions and other accounting nuances. For such situations, it will be beneficial for the company to use a franchise and eliminate potential monetary losses.

The deductible provides for the obligatory payment by the insured of all expenses. This standard is accepted for all civilized countries of the world.

Features of the franchise

To successfully resolve the existing issue related to the conduct of insurance payments, you should understand the nuances of registering a franchise. Without fail, all the subtleties of cooperation must be spelled out in the contract. If the contract contains a car franchise, the owner of the car can agree on the terms of the service with specialists. Individually determine the type of franchise, size, terms of payment. The document is drawn up only after the consultation, because the insurer always remains in profit. The client of the company should think about himself in order to guarantee savings in dealing with financial issues in a potential accident.

To apply for a franchise, you must submit the following set of documents:

• original and copy of the civil passport;
• Title issued for a specific vehicle;
• certificate confirming the registration of the vehicle;
• original and copy of driver's license;
• an officially executed application for CASCO or OSAGO with an additional clause about the franchise.

Each client of the insurance company must remember the need to submit the established package of documents. Only after that it becomes possible to obtain an OSAGO or CASCO policy with a franchise at a reduced price.

A properly executed contract determines the situations when the insurer must successfully fulfill its obligations. In other cases, the motorist must independently regulate conflict situations. Understanding the intricacies of cooperation with an insurance company and the possibility of independently resolving existing issues determines the possibility of using a franchise.

How to use a franchise abroad?

Knowing what a franchise is for car insurance abroad, you can compare the features of using an additional product in your homeland and in other countries. A franchise always contributes to increasing the responsibility of the motorist, who must eliminate the risk of any accident. It is determined on the basis of the amount that will be paid by the driver in the event of an accident. The insurance company pays the rest of the compensation.

Registration of a car franchise for trips abroad is not a mandatory requirement, but many motorists still decide on this approach. In fact, there is a significant difference in the available offers. Sometimes a franchise is issued for 350 euros, and in other cases - for 2,000 euros. The average is 800 euros. If desired, you can refuse to use an additional product. It all depends on the level of development of driving skills.

If the franchise is not used, the motorist takes out full insurance. It is assumed that in this situation the company must pay compensation in full after the appraisal activities. Such insurance is always more expensive.

A franchise is a suitable product only for experienced motorists. In this case, the driver saves on obtaining a policy and eliminates the risks of serious conflict situations that have occurred due to the driver's inattention. You need to be prepared for the fact that in case of an accident you still have to spend money, because the franchise provides for the provision of assistance by a specialized company only in case of serious damage. For any minor damage to the affected car in a potential accident, you will have to pay yourself.

It should be remembered: in many situations, the issued insurance policy does not cover headlights, wheels. Most often this is included in an additional fee, as it belongs to the category of options. At the same time, the assessment can be carried out according to a different scheme, so it is recommended to draw up an agreement with a clear prescription of each item in order to prevent disputes.

The franchise can be used when renting a car abroad. If the driver is not sure about the successful trips, Super insurance is allowed. This alternative to a franchise contributes to an additional financial investment when buying a policy and increases protection when traveling abroad.

Abroad, it is possible to return the franchise. In this case, in case of a car accident, funds will be withheld within a certain amount, but subsequently the finances will be returned. Such cases require the precise fulfillment of all formal obligations by the driver.

Features of cooperation are determined on an individual basis in the interaction between the insurance company and the motorist who plans to rent a car for trips abroad. The conditions of the contract being drawn up must correspond to the experience and degree of faith of the motorist in their driving abilities.

When to take out insurance with a franchise?

Before using a franchise when applying for a car insurance policy, you need to know not only the features of the additional product, its benefits, but also the situations when it is best to take out insurance. It is advisable for some drivers to immediately refuse an offer that will not be profitable:

1. The availability of free cash on an ongoing basis is a mandatory aspect when registering a franchise. Only in this case, the driver can successfully negotiate minor repairs within a timeframe that the injured party agrees to. The franchise provides for the readiness of a motorist to independently repair not only his own, but also someone else's vehicle.
2. Minor injuries in accidental accidents occur in half of motorists. Conflict situations appeared at least once during the entire driving experience. Even a minor accident can lead to an increase in the cost of CASCO for the next year, so in some situations it is possible to reduce the cost of the policy during its renewal and eliminate the risk of increasing the coefficient. If the driver is committed to accident-free, it is best to include a franchise in the contract being drawn up.
3. Accident-free driving experience and confidence in driving skills. Motorists with an experience of 15 to 20 years are entitled to use the franchise. This is due to the ability to exclude the undesirable impact of an accident with minor damage to cars on the cost of the policy when it is renewed. Considering the presence of risks that cannot be avoided, the driver can issue OSAGO, CASCO on the most favorable terms and guarantee a high level of protection for himself.
4. Intention to insure the car only under the “Theft” clause. A full insurance policy divides items into two categories: Theft and Damage. The policyholder has the right to insure the car only against theft, if he is confident in his luck and perfect driving skills. In addition, you can use CASCO with a high deductible for the risk of "Damage", which will also be beneficial.

Each motorist must independently assess their attentiveness and the level of development of driving skills. For this reason, you need to decide how profitable a franchise can be when you take out an insurance policy.

When to Quit a Franchise?

The franchise is not recommended for those who are more likely than other motorists to get into car accidents and must regularly contact a specialized company for compensation. Trying to save money in this scenario can lead to multiple expenses for repairing other people's cars. Thus, it is best to refuse a franchise for novice motorists and inattentive, unlucky drivers.

A franchise in car insurance is a specific product that requires a special approach to its assessment. Responsible analysis and understanding of the specifics of cooperation with an insurance company determines the possibility of protecting the car from unwanted risks and the chance for savings by purchasing a policy at a reduced price.

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 for 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

Car insurance today against risks of various types is not a luxury, but a necessity. That is why CASCO policies are in great demand, as they allow you to avoid various kinds of costs associated with car damage.

The only drawback of this type of policy is its high cost, but it can be significantly reduced through an unconditional deductible.

What it is

An important feature of the insurance contract is called. It directly affects the cost of the policy. The larger the unconditional deductible, the lower the insurance premium will have to be paid to the insured client.

An unconditional deductible is understood as a certain amount of money from which the insurance client refuses in the event of an insured event.

For example, as a result of an accident, damage in the amount of 120 thousand rubles. The amount of the unconditional deductible stipulated in the insurance contract was 20 thousand rubles. In this case, the insured will receive an amount equal to the difference between these two values ​​- 100 thousand rubles.

The franchise of this type has a large number of various advantages, which is why it is very popular.

The most important include:

• low cost of the policy;
• in the event of minor accidents, the damage from which fits into the size of the deductible, payments do not arise - this has a positive effect on the insurance history.

Acquiring this kind of franchise is worth experienced drivers for whom accident-free driving is the norm.

Such clients, when applying for a CASCO policy with an unconditional deductible, simultaneously kill two birds with one stone: they avoid large expenses for the insurance premium and may not worry about death or serious damage to the car.

The size of the franchise of the type in question is defined as:

• some specific amount
• amount expressed as a percentage.

It is most advantageous to use the specific amount specified in the contract. This allows you to predict your expenses.

The deductible, expressed as a percentage, allows you to further reduce the amount of the insurance premium. But at the same time, it is less profitable in the event of an insured event.

What are the features

An important feature of an unconditional franchise is its size. In each case, its choice is made individually. The amount of the franchise depends, first of all, on the cost of the car, its individual parts, as well as the complexity of the repair.

For example, the meaning of a franchise, the size of which is only 1 thousand rubles, No. Since for the implementation of repairs and the purchase of parts today, most vehicles require a fairly significant amount, usually five figures.

Most often, the minimum unconditional deductible can be an amount of at least 10 thousand rubles. Most often, the amount, expressed as a percentage, is calculated based on the cost of the car.

The most common ratios are:

• from 0.5% to 2%;
• over 5.

Accordingly, the higher the percentage, the lower the cost of the CASCO policy.

Another feature of the unconditional franchise is the impossibility of avoiding its use if an old car is insured (which is more than 3-4 years old).

Most insurance companies provide CASCO policies only if a deductible of 10% is used for equipment of this type, if the following risks are insured:

• theft/theft;
• complete structural failure.

Also, quite often, the use of an unconditional franchise is mandatory for new cars that are less than 3-4 years old.

This is necessary if the CASCO policy includes drivers whose age is less than 25 years, or their driving experience does not reach 3 years.

Most often, the franchise is expressed as a percentage of the cost of the car. In most cases, its size is at least 5% - this parameter is strongly influenced by the cost of the insured vehicle.

What does the cost depend on?

The cost of a CASCO policy with an unconditional franchise depends, first of all, on the following factors:

• age and experience of the driver;
• the number of persons allowed to drive a car;
• the presence of accidents, compensation payments in the next year or two;
• the presence of an anti-theft system in the car, satellite navigation, and other additional equipment;
• place and conditions of storage of the car.

Most of all, the price of a CASCO policy with a franchise of the type in question is affected by the age and experience of drivers admitted to driving.

The shorter the length of service, the higher the cost of the policy and the minimum deductible. So the insurance company tries to protect itself from the occurrence of possible losses.

The more people who can drive the car, the less likely it is to drive without accidents. Therefore, the more drivers are included in the policy, the higher the multiplying factor is used. Many insurance companies allow themselves to double the price of a CASCO policy if the number of persons included in the policy is more than two.

The cost of the policy is greatly influenced by the insurance history. In most companies, the last year is taken into account: are there any accidents, what is the amount of compensation payments.

The greater the number of traffic accidents on the account of drivers, the more expensive CASCO will cost him.

Also, the minimum size of an unconditional franchise will be very large. In some cases, the company may completely refuse to issue a CASCO policy if the client has shown himself to be unreliable, unprofitable. This problem can only be resolved by contacting another insurance company.

The more seriously the car is protected from theft, the lower the cost of insurance. So, the presence of an advanced anti-theft system and a satellite tracking system can sometimes reduce the cost of a CASCO policy with an unconditional deductible by almost one and a half times.

The conditions for storing a car are also very important: if it is constantly in a paid parking lot or stored in a garage, then the price of the policy will be minimal. In addition, the risks associated with theft are reduced.

How is it different from conditional

In addition to the unconditional, there is also a conditional franchise. It also has both its advantages and disadvantages. The contract stipulates a certain amount within which the insured is liable for the damage on his own.

And only if its amount exceeds a certain amount, there is an obligation to pay monetary compensation.

The most important difference between a conditional franchise and an unconditional one is that in the event of an insured event, the company fully covers all damage.

In this case, there are no deductions or other monetary losses on the part of the insured. It should be borne in mind that the conditional deductible has a significantly smaller impact on the price of the CASCO insurance policy.

That is why you should think carefully before choosing one or another way to save money. Each franchise has its own advantages and disadvantages.

Most insurance companies provide CASCO policies on the following terms:

This makes an unconditional franchise obviously more profitable than a conditional one. That is why most car owners opt for it when concluding an insurance contract with the help of a CASCO policy.

What type of CASCO franchise is better to choose

Today, many insurance companies offer their customers not only an unconditional and conditional franchise, but also some others:

• dynamic;
• preferential.

A dynamic deductible involves an increase in insurance compensation in the event of each new insured event.

For example, if no monetary compensation is paid in the first accident, then in the second it covers 50% of the damage, in the third - 75%. Conditions in each UK are offered differently.

A “preferential” franchise is understood as the existence of any conditions under which compensation is not paid or, conversely, is paid.

The choice of a particular type depends on a large number of very different factors. If the driver has an impressive experience of accident-free driving, then he should turn his attention to the conditional franchise.

Since it allows you to minimize the likelihood of incurring any losses as a result of an accident (in the absence of minor traffic accidents).

If the driver has a short driving experience, then it is best for him to purchase a CASCO policy with an unconditional deductible. Since it will allow you to avoid a “bad” insurance history: the presence of minor accidents will make purchasing a CASCO policy for the next year much more expensive.

And at the same time, the use of a franchise will make it possible to somewhat reduce the cost of insurance of the type in question.

The use of a preferential or dynamic franchise is justified only in some individual cases. For example, if the car is used quite rarely and the probability of an accident is low precisely due to the seasonality of operation.

Each individual case should be considered separately, it is best to consult with an employee of the insurance company - it is in his interests to reduce the likelihood of the need for an insurance payment. At the same time, this factor can significantly reduce the cost of the policy.

Purchasing a CASCO policy with a franchise allows you to significantly save your money. This is important given the high cost of this type of policy today.

Also, the franchise makes it possible to avoid the need to collect a lot of documents in the event of a minor traffic accident.

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