deductible franchise. What is the optimal franchise size for a client? Auto insurance franchise video

Today we will talk about how different types of franchise in insurance differ: unconditional, conditional, dynamic and others. This will help to avoid misunderstandings with the insurer if an insured event occurs - often there are situations when the client is waiting for payment, and the company refuses it because the first one did not understand all the terms of the contract. Before moving on to types, let's deal with the concept itself.

Franchise is a clause of the insurance contract that allows the company not to pay compensation if the amount of damage does not exceed a predetermined threshold. Let's take an example: you have insured your new car under CASCO. The contract states that the franchise amount is 30,000 rubles. It so happened that you got into an accident and the amount of damage is estimated at 25,000 rubles. In this case, the insurer does not owe you anything, because the damage caused to the car is cheaper than the threshold amount specified in the contract.

It seems that the franchise is a clever trick of the insurance companies, allowing them to evade liability legally. But for customers, it also has its advantages:

• saving money

Typically, deductible insurance products cost less, so if you drive carefully, they help you spend less.

• Time saving

The less risks the insurer bears, the less he wants to deal with bureaucratic red tape and pester you. Therefore, if you do not want to waste your time negotiating with company managers, a franchise is more of a plus than a minus.

• Safety in case of major risks

Yes, no one compensates anything if you scratched the bumper of the car, but in case of serious damage, the damage will be reimbursed in full and you will calmly repair the car or other property.

Unconditional and conditional deductibles in insurance - what is it and how do they differ

Threshold values ​​are calculated differently in different cases. Insurers have different approaches to working with different types of property, because they take into account the riskiness of concluding a transaction. The probability of getting into an accident in a car is obviously higher than losing an apartment in a fire. Therefore, in the first case, insurance companies try to minimize the amount of payments - every thousand rubles saved is important for them, and there are quite a lot of insured events across the country.

A conditional deductible in insurance is ...

A model under which compensation is paid in full if the amount of damage exceeds the threshold defined in the contract. Let's go back to the car example. If the damage is 25,000 rubles, then the client will not receive anything from the insurer. But if the repair of the car will cost 40,000 rubles, then the company will reimburse this amount in full.

This model is rarely used, because it is reasonable to apply it only in the case of property that is not at risk. In CASCO contracts, it cannot be found at all, because in the event of an accident, car owners sought to increase the amount of damage and shake more money from the insurance company. The latter, of course, do not like this practice. So the conditional franchise in insurance turned into a tool for working with “risk-free” expensive property, such as real estate.

Interesting

At the same time, it is beneficial for both the client and the insurer. The former receive full compensation for damage if their property is seriously damaged, while the latter do not have to come up with difficult-to-understand terms of the contract and lose face in the eyes of the client.

An unconditional deductible in insurance is ...

… a model according to which the insurer pays the difference between the actual amount of damage and the established threshold. If we consider the example of a car, then the situation will change somewhat and not in favor of the client. In the event that the car receives damage for 25,000 rubles, no compensation is also paid. If the amount of damage is 40,000 rubles, then the insurer will reimburse the difference between it and the agreed amount of the deductible.

40,000 - 30,000 = 10,000 rubles.

It is this amount that the client receives when he signs an agreement with an unconditional franchise. With this model, companies minimize insurance claims and avoid risks, so it is most common. For clients, it is absolutely not profitable, because even if the property has suffered very seriously, part of the repair will have to be paid out of pocket.

There is another model of unconditional deductible in insurance - it differs from the usual one in that the "non-payment amount" is determined not by a fixed value, but by a percentage. This approach is no different from incomplete insurance, when you conclude a contract not for the entire value of the property, but for part of it. Consider the car example again. The amount of damage we have is the same - 40,000 rubles. Franchise - 30%. In this case, the insurer will pay the client:

40,000 - (40,000 x 0.3) = 28,000 rubles.

For the client, this model is beneficial if the property is not very expensive. In this case, even the “size of non-payments” that progresses with the growth of damage does not hit the pocket. For companies, it is not profitable at all. One of the goals of including a franchise in the contract is to reduce the number of insured claims and reduce the time spent on bureaucratic red tape. And if the client can count on compensation (albeit not full) in any case, then he will demand it every time. Therefore, such a condition is extremely rare.

Other types of franchises

The remaining types of contracts apply only to certain types of property, so we will not dwell on them in detail and consider them briefly.

Dynamic

In this case, the share of uncompensated damage is determined as a percentage and grows as the insurance company is contacted. Example: you have car insurance. In this case, the franchise amount will be:

• 0% on first contact
• 10% for the second
• 17% for the third and so on.

Insurers often offer such conditions when drawing up a CASCO contract - so careful drivers either don’t lose money on repairs at all, or invest small amounts from their own pockets - it’s quite difficult to get into an accident three times a year even on Russian roads. Therefore, if you are offered a dynamic unconditional deductible, this is an occasion to think about changing the insurance company.

Preferential

In this case, the contract prescribes in which cases the damage is fully compensated. For example, it is indicated that if a lamppost falls on the car, then the full amount of the repair is compensated without any deductions. A more mundane case: the deductible does not apply if it is not the policyholder who is to blame for the accident, but the second participant in the accident.

Temporary

In this case, the contract stipulates a period during which compensation cannot be received. For example, you insure a car, and the terms of the agreement are such that if you get into an accident in the first two months of its validity, you do not receive anything from the insurer.

high

Used for valuable property. Under the terms of the contract, when an insured event occurs, the company compensates for the damage in full. At the same time, you undertake to return the amount of the deductible to her as soon as the damage to the property is repaired. According to this model, they often (but not always) work with property that brings income to the owner - where does the client get money if their inflow has stopped due to damage to the property?

Conclusion

We figured out what it is - a conditional and unconditional franchise in insurance, talked about its other types and tried to figure out in which case each of them is beneficial. In general, such a model allows you to reduce the cost of the policy and is useful if the risk of an insured event is low or the cost of eliminating damage is low.

In addition to compulsory insurance, drivers conclude such an agreement as CASCO. It is this contract that will be able to cover all the costs associated with the restoration repair that will arise as a result of the damage. In this article, we will figure out what a deductible is in CASCO insurance, why it is needed and which one is better to choose.

Before buying franchise protection, it is important to understand what it is. In simple terms, this is a specific money limit, expressed in percentage or monetary terms, within which the owner of the vehicle himself compensates for the costs of restoration repairs.

The percentage or the exact limit is always negotiated before the signing of the contract, by agreement of the parties. It is also important to understand that at any time during the term of the policy, you can change the conditions, namely, reduce or increase the deductible limit. All changes are made directly at the central office of the financial institution, by drawing up an additional agreement.

Kinds

When drawing up a contract, it should be understood that there are different types of restrictions on payment. Often, in practice, insurers offer to choose from two options that are approved by internal rules. To make the right choice, you should clearly understand how the funds will be received.

Unconditional

It should be noted right away that this is the most common option offered by auto insurance managers. Its working principle is very simple. All that a motorist needs to do is to choose the amount that he will always contribute himself in order to pay for repairs.

As for the contract, insurers offer to fix the franchise:

• in fixed monetary terms
• as a percentage of the real price of the vehicle

For example, the policyholder indicated a limit on his own compensation within 15 thousand rubles. If, upon the occurrence of an insured event, damage is caused to:

• 15,000 rubles or less - the client receives nothing and makes repairs at the expense of his savings
• 20,000 rubles - receives only 5,000, and adds 15,000 himself

It turns out that with an unconditional franchise, the client will always have to pay extra, within the selected limit. As for the percentage, insurance managers often offer to choose the amount of their own payment in the range from 1 to 10% of the market value of the car, which is determined at the time of insurance. If the motorist chooses the condition - repair at the station, then you will first need to pay part of the money to the station and only after receiving the full payment, provide the car for repair work.

Conditional

A conditional franchise, like an unconditional one, is set at the choice of the client in monetary terms or as a percentage. However, the principle of its work is slightly different, since the company will pay the full amount of damage only if the amount of damage exceeds the agreed limit.

In simple words, the client chose a limit of 10,000 rubles. If the amount of damage is 10,000 rubles or less, then the motorist will have to repair the car on their own. In the event that the loss is caused in the amount of 10,000 or more, the insurer transfers the funds in full.

Temporary

In this case, the name speaks for itself - this is a restriction that is set for a specific period or period of time. When insuring a car, under the CASCO program, the client can choose that the franchise will operate only during the day. For example, a motorist can choose to have the restriction only apply between 24:00 and 06:00 in the morning. In this case, the company offers to choose how the payment will be made:

• minus the agreed amount
• money is not paid

In the second case, the voluntary protection form will cost much less.

Dynamic

As for the dynamic deductible, this is a limitation that operates depending on the number of insurance payments and is also set as a percentage.

For example, often financial institutions offer the following payment option:

• at the first loss - payment in full
• at the second loss, a part is paid, for example, 50-70%
• for the third damage, an even smaller percentage is paid or no payment occurs

The terms of a dynamic franchise are written on the form at the time of conclusion. It is important to understand that this is an excellent condition for experienced drivers who are not to blame for the accident themselves, but may incur losses through the fault of third parties.

high

Such a restriction is applied in practice extremely rarely and under contracts with legal entities, for which the sum insured is several million rubles. As for the size of the franchise, it, based on the name, is high, and amounts to at least 100,000 rubles. Upon the occurrence of an insured event, the insurer makes a payment in full and then demands to reimburse the amount of the agreed limit, within a certain period of time.

Preferential

An attractive type of franchise, which is often offered to corporate clients. In an agreement with such a condition, payment can be made if:

• The insured is not at fault for the accident.
• the amount of damage does not exceed 100,000 rubles
• no more than two vehicles are involved in the accident

Each financial institution is ready to offer its own payment terms, which are clearly stated in the voluntary insurance policy.

recourse

This type of restriction is similar to high, only it differs in the limit. As a rule, according to the recourse restriction, the franchise amount does not exceed 30,000 rubles. The principle of operation is that the insurer pays the full amount of damages, after which it issues an invoice to the insured for the amount of the deductible. The client is obliged to pay the limit fixed under the policy to the insurer within a certain period. In this case, the recourse condition applies to each insured event.

How to calculate

As mentioned above, the deductible can be calculated both as a percentage and set as a fixed amount. In the first case, the percentage is charged from the market (insurance) price. For example, a car costs 1 million rubles, and the limit is set at 10%. In this case, the insurance organization will withhold or focus on a limit of 100,000 rubles.

When is the best time to choose deductible insurance?

When buying a voluntary policy, it is important to understand that a franchise is only beneficial in some cases. Let us consider in detail when you should choose voluntary protection with such a mysterious condition as a franchise:

When is it better to refuse such conditions?

It is not always worth choosing this condition for CASCO, in order to save money. There are cases when insurers recommend abandoning the franchise and buying a contract with a full package of risks.

It's worth giving up:

In conclusion, it can be noted that a franchise is a condition under a voluntary agreement, which is not suitable for all drivers. Before applying for protection, it is necessary to carefully study all the nuances of the insurance payment and, if necessary, seek advice from an experienced expert.

Advantages and disadvantages

This attractive payout limit has both advantages and disadvantages. Let's consider each in detail.

Video: What is a franchise in CASCO?

Offices of insurance companies on the map

Insurance is a way to avoid material damage in case of accidents. You can insure life and health, real estate, car. But the cost of insurance in some cases is quite high. To somewhat reduce the cost of insurance, it is possible to obtain a franchise.

The sum insured, the insurance premium and the deductible are the main components of the insurance contract. The sum insured is the amount of funds that the insurer or insurance company must pay to the beneficiary in the event of an unforeseen situation that entailed financial losses. The insurance premium is charged as an insurance premium. These terms are known to everyone who has at least once encountered insurance.

What is a franchise?

What is a deductible in insurance often remains a mystery to most customers. Insurance agents often offer a franchise, but clients are afraid because they do not know its benefits for themselves.

A deductible is a certain part of the total amount of insurance that the client will pay on his own if an accident occurs. In a certain way, the insured participates in the risk. A deductible can be a fixed amount or a percentage of the cost of insurance.

What is an insurance franchise in simple words? This is a discount when buying an insurance policy, but the discount is issued for a reason. By agreeing to a discount when paying a fee, the client assumes responsibility for a certain amount of costs.

Types of franchises in insurance

There are the following types of franchises in insurance:

• Unconditional - if the amount of damage caused is less than the deductible, it is paid by the client, if more, then the insurance company, subtracting the deductible.
• Conditional - if the damage is less than the deductible, it is assumed by the client, when the damage is greater - the insurance company pays the entire necessary amount.
• Temporary - often found in new insurance companies. In this option, the franchise is negotiated in time. If damage is received ahead of time, the client is fully responsible.
• Dynamic - its size changes with the next insured event, as a result, those clients who expose themselves to risk more often than others, with each such case, pay for an increasing part of the damage at their own expense.
• High - issued only for large transactions. An insured event has occurred, the insurer pays for the damage in full, and then the insured returns the agreed deductible amount.
• Preferential - such a franchise gives a discount on insurance, but the contract states that, for example, payments are not made if an accident occurred through the fault of the client.
• Regression - works on the same principle as the high one, but the amounts are not so high. The insurer pays the damage in full, and the client then returns the deductible amount stipulated by the contract.

Video about what is a franchise in insurance

Advantages for the insured when applying for a franchise

The franchise is beneficial not only for insurance companies, but also for the insured. Advantages when registering a franchise in an insurance contract:

• First of all, thanks to this, the client receives a discount when paying the insurance premium. If the client is sure that the insured event will not occur, or insurance is a required formality, then it is beneficial for him to set the maximum deductible amount, while reducing the premium.
• Since the insured pays for minor damage under the franchise himself, he does not need to spend extra time visiting the insurance company and filling out a large number of papers.
• There is a possibility that no trouble will occur, while the client saves part of the insurance premium.
• The client is partly responsible, he tries to be more careful and avoid risk as much as possible.

Conditional and unconditional franchise in insurance are the most common types. To have a complete understanding of these franchises, it is worth considering their main differences.

Unconditional franchise

Unconditional deductible in insurance - what is it? This type of franchise is more common than others. At the same time, a fixed amount of costs, which, in which case, the client pays, is immediately indicated in the insurance contract. The damage may be insignificant, in which case the insurance company does not pay out any insurance.

If the amount of damage exceeds the amount of the deductible, then the insurance company pays for the damage, the amount of the deductible is deducted.

The concept of an unconditional franchise is easy to understand with an example. If the sum insured is 1,000,000 rubles, the deductible is 100,000 rubles. In the first case, the damage will amount to 80,000 rubles, in the second, 150,000 rubles. With an unconditional deductible, in the first case, the insurance company does not pay anything, the client assumes the entire cost, in the second case, the insurer company pays 50,000 rubles, the client pays the rest.

Conditional franchise

A conditional franchise in insurance is a type of franchise that differs from an unconditional one in only one moment. In the event of an insured event for an amount equal to or less than the deductible specified in the contract, the insurer does not pay insurance to the client. But if the amount of damage is greater than the amount of the deductible, the client does not pay anything on his own, all expenses are covered by the company.

Using the same example, we can consider a conditional deductible - in the first case, the client pays for the damage of 80,000 rubles, in the second, the insurance company fully assumes the obligation to pay the entire amount of damage in the amount of 150,000 rubles.

The conditional deductible is rarely used in insurance contracts. An unconditional deductible is included in property insurance, most often with auto insurance.

Car insurance franchise

It is necessary to understand what it is - a franchise for car insurance. Most often it occurs in the case of CASCO insurance. It is drawn up by agreement of the parties. In automobile insurance, an unconditional deductible is applied. The benefit of the client will depend on driving experience, driving style. In two cases, an unconditional franchise can play into the hands of the car owner or turn into a loss.

A deductible in car insurance can be beneficial for a driver with extensive experience in accident-free driving, who has the opportunity to pay for minor repairs from his own funds, as well as for those who insure a car under CASCO only against the risk of theft. In the latter case, on the contrary, one should strive to issue the maximum franchise.

A deductible for car insurance against damage can be applied, it will not significantly affect the amount of payment for total damage and serious accidents.

If the insurance turned out to break even, the client saved on the insurance premium, which for CASCO insurance is quite a large amount. But in the event that the car is damaged, then depending on the size of the deductible and the cost of repairs, the client may have to pay half of the amount of insurance.

Auto insurance franchise video

In the case of minor damage, the client sometimes needs a lot of time and effort to receive insurance compensation. Therefore, with an existing franchise, it is easier to directly contact the service station and pay for inexpensive repairs on your own than to spend time completing the necessary documents.

In many insurance companies, it is mandatory to include an unconditional deductible in the insurance contract when it is renewed. This applies only in cases where there is a certain amount of losses. If the client disagrees with this condition, he may be refused to renew the insurance contract. Therefore, it is unprofitable for the insured to get into an accident.

Temporary deductible in insurance

A temporary deductible in insurance is often used in new insurance companies. By registering a temporary deductible in the insurance contract, they thereby guarantee themselves a deferral of payments for a certain time. During this period, young insurance companies earn their initial capital, from which the sums insured are subsequently paid. Sometimes a temporary franchise is not indicated in the contract as conditional or unconditional, so it is automatically considered conditional. The damage is reimbursed in full, as if there was no temporary deductible.

With the advent of the franchise, insurance has become more affordable for a larger number of the population. It makes it possible to significantly reduce the cost of insurance for many insurance products. This is especially evident in such an expensive type of car insurance as CASCO. The amount of the insurance premium is reduced several times even with a 1% deductible.

When insuring OSAGO, the amount of the deductible is regulated by the state.

Do you consider franchise insurance profitable? Share your opinion in

FROMinsurance franchise is part of the loss determined by the insurance contract, which in the event of an insured event is not subject to compensation by the insurer, or it is the share of the insured in covering the damage caused. Most often it is set as a percentage of the sum insured or as a fixed sum of money.

Thanks to its application, a combination of self-insurance with insurance is achieved. Exemption of the insurer from the payment of minor damages in the amount established under the current franchise, and which allows him to make the procedure for indemnification easier and cheaper and, accordingly, reduce the necessary tariff rates. At the same time, policyholders are interested in taking preventive measures to preserve property, health or reduce the risk of liability to third parties, since in this case part of the risk is placed on the responsibility of the policyholder.

Types of franchise in insurance

There are: conditional (or integral) and unconditional (or excess) franchise.

Conditional franchise- a part of losses is stipulated in the insurance contract, which is not reimbursed by the insurer in cases where the amount of losses is within the established deductible. If, upon the occurrence of an insured event, the amount of damage exceeds the deductible, then it is reimbursed by the insurer in full. The use of a conditional franchise by the insurer is intended to dissociate itself from small, such that losses often occur (repeated). More often, a conditional deductible is used in personal insurance. The insurers may, in the conditions of insurance, determine the number of sick days for which insurance assistance is provided. If the insured was on sick leave for longer, then the benefit is paid for the entire period of incapacity for work.

Unconditional franchise- this is the part of losses stipulated in the insurance contract, which is calculated in all cases from the obligations of the insurer, that is, it is not subject to return to the insured when paying out insurance indemnities. In this case, the liability of the insurer is determined by the amount of loss minus the deductible. The use of an unconditional deductible is common in the insurance of vehicles and other property objects, it provides the insurer with a reduction in the cost of doing insurance business by avoiding risk calculations that lead to insignificant amounts of losses. When applying a franchise, the insurer provides benefits to the insured in paying insurance premiums due to lower tariff rates for the relevant type of insurance.

The franchise in insurance is used for all types of property and has been used for quite a long time. However, the search query “franchise in insurance - what is it in simple words” is very popular, which means that many motorists are interested in information about the franchise.

So, a deductible is an amount or a percentage. If the deductible is higher than the damage incurred, then the person who insured his property will not receive compensation. It may seem that this is completely unprofitable for the client - why pay for the policy, and then also repair the car for your own money? What's the point of insurance then? However, in some cases, a franchise can be beneficial for the car owner. Insurance companies offer different types of deductibles, so you can choose the most suitable one or refuse to use it at all.

Franchise Varieties

Conditional and unconditional deductibles in insurance are the most common, however, in addition to them, there are other franchises that are offered to the consumer. More about them.

Conditional franchise

When a conditional deductible is used, the damage to the insured is reimbursed provided that it exceeds the deductible. If the damage is less, then no payments will be made.

Let's explain clearly: you insured damage for 500,000 rubles, set a deductible of 15,000, the damage amounted to 13,000. You are not entitled to compensation.

Let's change the condition: the damage was estimated at 25,000. It is higher than the deductible, which means that it will be fully reimbursed.

Unconditional franchise

Unconditional deductible in insurance - what is it? What is the fundamental difference between conditional and unconditional franchise? In the case of using this franchise, the car owner is compensated for the difference between actual losses and the size of the franchise.

Let's assume that the franchise agreement was determined in the amount of 10,000 rubles. Damage from damage to the car was estimated at 30,000 rubles. compensation from the insurance will be 20,000 rubles.

And if the damage was less than the established deductible, then the insured will not be paid anything.

In addition to the above, there are:

• dynamic;
• preferential;
• temporary;
• aggregate franchise.

Dynamic Franchise

With a dynamic deductible, its size changes throughout the entire insurance period. When contacting the insurer for the first time, it may be zero, i.e. what damage you have suffered, you will receive such compensation. With the second and subsequent treatment, it will grow. Therefore, if several insured events occur during the term of the insurance contract, only for the first one you will receive full compensation, for the rest of the cases, if the damage is less than the deductible, you will not be able to claim payment.

Preferential franchise

When a preferential franchise is used, the contract establishes the cases of its application, within which the damage is not subject to compensation. Outside of the established cases, you can safely count on partial or full compensation.

With a temporary deductible, a certain period is established during which the damage from the insured event that has occurred is not reimbursed by the insurer. This franchise is usually used when the car is insured against theft, and it is aimed at preventing fraudulent and dishonest actions of the insured. We are talking about the situation when theft of a car is adjusted in order to receive compensation from the insurer.

Aggregate franchise

With an aggregate franchise, a limit on insurance payments is set. As soon as the limit is exhausted, the insurance will be terminated. The use of an aggregate franchise will also help reduce the cost of the policy, but you should not use it if you have been driving recently.

Features of franchise insurance

An insurance contract with a franchise clause included in it has no fundamental differences from an insurance contract that does not provide for a franchise, with the exception of the terms of the franchise itself, which you need to read carefully. We emphasize that some insurers may not allow you to use the franchise when the car is purchased on credit.

The size of the franchise, as a rule, varies in the range of 10,000 - 75,000 rubles, and the car owner has the right to decide for himself how much to set it. The main rule: a high deductible is a cheap policy.

Advantages and disadvantages of franchise insurance

The main advantage of the franchise is the ability to significantly save money when buying a policy. In addition, in case of minor damage, you will not need to contact the insurer at the right time, prepare a package of documents, and if the insurance company does not want to pay, you will not need to sue, defending your innocence, which will save both time and nerves.

Excess insurance can be beneficial for experienced and attentive drivers who have a long history of driving without accidents. In this case, it is likely that the driver will avoid minor accidents, the damage from which will be less than the deductible itself.

Another advantage of the franchise will be the ability to spend less money on buying a car insurance policy against theft or total death.

However, the use of a franchise has a drawback: if several insured events occur, the damage for each of which is less than the franchise, then the car owner will have to pay for minor repairs on his own. Naturally, the cost of the policy will not be returned to you, which means that you spent twice as much - on the policy and on car repairs. This is especially disadvantageous for novice drivers, who, as statistics show, can often get into accidents.

Franchise for CASCO insurance

The deductible for CASCO insurance makes it possible to buy a policy at a discount and insure the car against theft or death with the least losses. Of course, the deductible also applies to other insured events - with its use, you can insure other types of damage. The use of a franchise may not be beneficial to everyone, so whether or not to apply it is up to you, since nothing prevents the conclusion of a CASCO insurance contract without using it.

If you are interested in the opportunity to insure a car for, then read the article of our specialist, which contains detailed information on this issue.

The price of Casco with a franchise depends on:

• the age of the driver;
• how long ago he got his driver's license;
• make and model of car, year of production.

Accordingly, a small driving experience and / or a large number of accidents in the past will affect the size of the deductible - increase it.

Conclusion