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Franchise in insurance – what is it? The concept of an insurance franchise + 7 types of franchises in insurance + what franchise size to choose for a client + the main benefit when concluding an insurance contract under a franchise.
When applying for an insurance policy, each person should know that there are 3 important components in this agreement: how much the transaction is for, the premium and the deductible.
Franchise in insurance is the most important element, which determines exactly how much money the insured and the injured party will have to pay in case of damage, and what the final amount of compensation will be.
1. What is a deductible in insurance?
The word “franchise” itself is of French origin; translated into Russian it means “benefit”.
? This is the part of the damage that is not compensated by the policyholder.
That is, in the event of an insured event, a certain part is paid at the expense of the victim.
For example, the amount of damage caused is 10 thousand rubles. The franchise has a fixed amount of 1,000 rubles. The insurance company will pay the victim only 9,000 rubles, the rest of the money must be paid by the victim.
The deductible benefit is either a fixed figure or is calculated using a percentage of the total insurance amount.
Why do you need a deductible for insurance? Russians, for the most part, refuse such a condition in the contract, but in practice it has been found that this is beneficial for the client.
After all, the higher this amount, the lower the tariff will be, and vice versa: the lower the franchise percentage, the higher the cost of the insurance policy.
2. Main types of insurance deductibles
To sign a contract with the insurance company, the parties must come to a unanimous agreement regarding the type of policy.
There are such varieties (of which only 2 are used in 90% of cases):
Name | Characteristic |
---|---|
1. Conditional. | According to the rules, insurance compensation will not be paid if the damage caused is equal to or less than the deductible. If the cost of the insurance situation is higher by at least one ruble, then the loss is paid in full. This type Today it is practically not used by insurance companies, because it is not profitable for them. |
2. Unconditional. | Under any circumstances, the franchise interest will be paid from the amount of damage caused. If it is 10%, and the loss reaches 1,000 rubles, the client will receive only 900 rubles. If the franchise size and cost insured event are equal, then no payments are made at all. The most common type in use today. |
3. Temporary. | By agreement, it is valid only for a certain period of time. That is, if the accident did not occur before the agreed date, then no money will be paid to the victim. |
4. High. | This type is used only for large contracts - usually worth 200 thousand rubles. First, the company fully pays for the damage and helps with legal proceedings. The deductible amount is returned to the policyholder after all the money has been transferred to the injured party. |
5. Dynamic. | What monetary compensation and the franchise itself will be will depend directly on total number accidents. For the first incident, the company pays compensation in full size. For all other possible physical injuries or accidents, the policyholder will deduct a certain percentage from the amount of damage. |
6. Preferential. | The client is not obliged to pay the organization anything, but only under certain conditions that are specified in the concluded contract. For example, the incident is related to health, an accident, etc. |
7. Mandatory. | Comes into force after the expiration of the contract under which payments were made after the damage caused to the client. That is, the client necessarily concludes new contract, where the franchise conditions will already be specified. |
3. What is the optimal franchise size for the client?
Of course, when drawing up an insurance contract, we want to get as much as possible in the event of an accident. more money to cover all expenses as much as possible. How can an ordinary Russian benefit?
In order to increase insurance, its percentage or fixed volume must have an average:
- If you choose a high level, then when only a small amount of damage is caused, the insured will benefit only for himself.
- At minimum size you will have to overpay for the policy itself, which is also not profitable in the future, because the accident may never happen.
Based on the calculations of experienced experts in this issue, there is a benefit if the amount of the benefit exceeds the minimum amount of damage. In percentage equivalent, it is 5% of the total cost, and if the value is fixed, it is 5-30 thousand rubles.
An example of calculations for using conditional and unconditional formats for CASCO insurance:
Franchise in insurance. Who benefits from it: the client or the insurance company?
Registration of a franchise in an insurance contract.
4. Benefit from the franchise
For the policyholder, the franchise percentage is a way to reduce expenses for paying for damages and reduce all possible risks. But on the other hand, the insurance company loses its income, because the client pays less for the insurance policy itself.
So you should not think that this type of contract is beneficial only for the insurer.
For those who want to purchase this type of policy for themselves, there are also certain advantages:
- First of all, the monthly volume of transfers to the insurance company decreases. This is beneficial if insurance is just a formality.
- You also won’t have to waste time collecting all the documents to prove the damage that was minimal for the victim.
- It will be beneficial to conclude such an agreement if the insurance amount is over half a million.
- If an accident never happens, then you do not need to overpay for the policy.
From this we can conclude that a contract using a franchise percentage is much cheaper than regular insurance.
Everyone knows that insurance companies exist precisely by selling policies. For their prosperity, it is best that there be a minimum of accidents and injuries, but at the same time cash flow increased uncontrollably.
It is to extract maximum benefits that they offer clients an agreement with this preferential condition. It gives them the opportunity to weed out those complaints from people that relate to minor monetary expenses.
After all, if, for example, the franchise amount is 2 thousand rubles, and the insurance situation is 1 thousand rubles, the injured party must independently solve the problem.
Franchise in insurance is a profitable economic instrument for both the policyholder and the client. How to use it? It is enough to tell the consultant about your desire when you enter into an agreement.
PS. Be especially careful when entering into an agreement. You need to carefully study all the terms of the contract, ask employees about existing types policies, tariffs, and what will be more profitable for you...
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Services related to insurance of property of citizens or organizations are becoming increasingly popular today, which indicates the formation of a responsible approach of owners to the ownership of various wealth objects.
Insurance is designed to provide protection and guarantee the safety of citizens' property for a certain fee. At the same time, a rather convenient mechanism is the use of a franchise when taking out various insurances, which allows you to reduce general expenses the policyholder and save the insurer's resources when indemnifying losses.
Insurance of movable and immovable property
Movable and immovable property of citizens and organizations is subject to insurance.
Traditionally, immovable property is considered to be firmly connected to the land - buildings, structures, houses, apartments, land plots, as well as air, sea vessels and space objects. Everything else can be considered property movable.
It is permissible to take out insurance for the following objects movable property: cars, furniture, household and computer equipment, electronics, clothing and shoes, books, dishes, jewelry, etc. The following cannot be accepted for insurance: banknotes, securities, scientific works, manuscripts, models, storage media, weapons, antiques (subject to separate species insurance) etc.
Legal entities can insure all types of transport, various cargoes, as well as other types of property. For individuals insurance available own life, health, apartments, houses, garages, transport, household and other property.
Insurance may be paid due to the occurrence insurance episode: fire, flood, explosion, damage, illegal actions of third parties - robbery, damage and destruction of property.
It should be noted that Russians are still quite skeptical about the practice of property insurance, considering this procedure expensive and unnecessary. This opinion often prevents property owners from objectively assessing the relationship between the costs of obtaining insurance and eliminating the consequences of accidents.
Registration of insurance involves taking into account three main elements: the amount of insurance, the insurance premium and the deductible. Understanding the third element must be approached with special attention, since the extent to which the policyholder himself will pay for his losses, as well as the cost of insurance, depends on the insurance deductible.
In insurance, the franchise is understood as that part of the damage that the client compensates at his own expense if an insured event occurs, that is, this is the degree of participation of the policyholder in the risk.
In this case, the insurer is exempt from paying the amount established by the deductible. This part of the losses is mandatory stated in the insurance contract in the form of a fixed amount or percentage.
So, for example, if the contract sets the franchise amount at 5%, then in the event of an insured event estimated at 100,000 rubles, the insurance company will pay the client 95,000 rubles, and the client himself will pay an additional 5,000 rubles. This calculation concerns the general case; in practice, everything depends on the type of franchise chosen.
The use of a franchise in the insurance business allows you to save money for the policyholder when taking out a policy. In addition, such a mechanism facilitates interaction with the insurance company in the event of minor damage.
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Everything happens in a few clicks, without queues and stress. Try it and you will be surprised how easy it has become!
Types of franchises and their brief characteristics
The insurance contract or rules establish the type and amount of the franchise.
There are several such species depending on the conditions for establishing the franchise:
![](https://i2.wp.com/delasuper.ru/wp-content/uploads/2016/06/franshiza_strahovka_uslovnaja.jpg)
Advantages and disadvantages
Disadvantage insurance deductible, at first glance, appears to be a non-payment to the client of part of the amount intended to compensate for damage. However, this is a rather primitive view of the franchise mechanism, the benefits of which can be very significant.
Franchise beneficial for clients the following reasons:
- saving money due to lower insurance premiums (for example, if insurance is needed only formally, when applying for a mortgage, then thanks to the establishment maximum size deductible, you can spend a minimum amount on insurance payments);
- saving time (if the damage from the insured event is minimal, there is no need to waste time interacting with the company or filling out unnecessary paperwork);
- if damage never occurs, there will be no need to use excess funds to pay insurance premiums;
- insurance with a franchise is beneficial for indemnifying large losses;
- when registering a franchise, the client is given a discount on the insurance policy, sometimes comparable to the amount of the franchise.
Franchise beneficial for insurers, because the:
- allows you to reduce the amount of insurance payments for clients;
- exempts employees from accompanying minor insurance claims.
Franchise in car insurance
Force majeure situations very often occur on the roads. Insurance companies offer to minimize financial risks associated with the consequences of an accident.
There are two types insurance for car owners:
- OSAGO. It is a mandatory type of civil liability insurance. It is through this that the losses of third parties are usually covered. However, if the policyholder is found to be at fault for the accident, then the guarantees of compensation for damage or repair of the car will be minimal;
- CASCO. This is a voluntary type of insurance, issued at will. Can guarantee the maximum degree of protection for motorists. Despite the fact that the CASCO policy is quite expensive, you can find a lot of positive points. You can save on the cost of the policy through a franchise.
Auto insurance policies provide compensation for damage in the following insurance cases:
- when the accident occurred;
- the car was stolen;
- an act of vandalism was committed against the car.
It should be understood that purchasing a car insurance franchise is not beneficial for everyone, but only for car owners with certain conditions:
- the driver expects to independently compensate for minor damage;
- a car enthusiast is usually very careful on the roads;
- the client does not want to bother with the registration of minor accidents.
For information on car insurance, watch the following video:
CASCO car insurance policy
Total exists two ways to apply for a CASCO policy:
- full version;
- subject to franchise.
At the same time, the cost of a full CASCO policy, although it depends on a number of factors, is very high. In this case, taking out CASCO insurance with a deductible can significantly reduce costs. Its size is determined by the parties and must be specified in the contract.
The following apply terms of registration insurance with deductible:
- deductible is mandatory if the risk complete destruction car or its theft is very high;
- The size of the deductible in case of an accident is usually equal to 10% of the total insured amount;
- the cost of insurance is inversely proportional to the size of the franchise;
- If a client applies for damages more than 1-2 times a year, registering a franchise will be unprofitable.
Whenever serious accident There are two options for compensation for damage: the client is given money for repairs minus the deductible, or he himself pays the deductible amount to the insurer's cash desk and has the car repaired at a service partner of the insurance company.
However, it will be difficult to issue an insurance policy with a deductible if:
- the car is pledged;
- the driver is new to driving;
- the car often gets into accidents.
How to choose the right franchise
CASCO with an unconditional franchise is currently the most popular among motorists in Russia. To apply for it, you just need to choose a reliable insurer who will accurately make payments. At the same time, you can choose other types of franchises, depending on the selection criteria available to the policyholder.
Immediately before the procedure for concluding an insurance contract, it is recommended to check the following information:
- what the insurance company is (lifetime, customer reviews);
- study existing tariffs and franchise amounts;
- assess the market attractiveness of the company and the relevance of tariffs and type of franchise;
- read the contract carefully;
- attend consultations with insurers.
The nuances of insurance when traveling abroad
Staying abroad requires tourists to take out certain insurance policies. You need to take insurance seriously different situations while abroad in order to avoid a lot of serious problems. It is common knowledge, for example, that one hospital visit to foreign countries can cost a very substantial amount.
Usually tourists traveling abroad conclude the following insurance contracts:
![](https://i0.wp.com/delasuper.ru/wp-content/uploads/2016/06/franshiza_strahovka_vibor.jpg)
Often, in order to obtain a visa, a citizen draws up a so-called comprehensive travel insurance contract.
The most important thing that you need to pay attention to when taking out any type of insurance abroad is the reputation of the partner of the Russian insurance company in the country where you intend to visit.
In addition, insurance may also have a deductible, and if its amount turns out to be greater than the insured loss, the tourist will have to pay for medical care or repair the car yourself.
A franchise in insurance services is a convenient and economical option, since it leads to a reduction in the total cost of insurance and increases the level of trust of the policyholder in the insurer. You just need to choose the most suitable type of franchise for yourself, which will allow you to save your property with maximum efficiency.
For information on the rules of health insurance when traveling abroad, watch this video:
The exact definition of the term " insurance deductible» gives the Law on the organization of insurance business in Russian Federation. Franchise in insurance is the part of losses that is determined federal law and (or) an insurance contract, is not subject to compensation by the insurer to the policyholder or other person whose interest is insured in accordance with the terms of the insurance contract, and is established in the form of a certain percentage of the insured amount or in a fixed amount. There are several types of franchise: conditional, unconditional, temporary, dynamic, high, preferential, etc. The most common in insurance are conditional and unconditional franchises.
Conditional franchise
Conditional deductible: the insurer has the right not to pay for damage caused if the loss is less than the established deductible. However, if the amount of loss larger size deductible, then the damage is paid in full. The amount of the conditional deductible is determined by the insurance company. This may be a percentage of the established sum insured or a fixed monetary amount.
Unconditional franchise
Unconditional deductible: the amount of insurance payment can be determined as the difference between the amount of damage and the deductible amount. This option is better explained with a specific example:
Option 1:
- Sum insured – 350,000 rubles;
- Unconditional franchise – 3500 rub.;
- Estimated cost of damage – 3000 rubles;
- You will not receive compensation, because the amount of damage is less than RUB 3,500.
Option 2:
- Sum insured – 350,000 rubles;
- Unconditional franchise - 3500 rub.;
- Estimation of the cost of damage - 7000 rubles;
- You will receive compensation in the amount of 3500 rubles. (7000-3500=3500).
Temporary franchise
A temporary franchise implies an agreement that specifically specifies the time period for the occurrence of an insured event. If the circumstance occurred earlier than the established period, then the insurer will not pay compensation.
Dynamic franchise
A dynamic deductible constantly changes the amount of payment to the policyholder. It is the amount that changes that is not included in the cost of compensation.
High deductible
When concluding large property contracts, a high deductible is sometimes used. The size of such a franchise starts from $100,000. If something happens to the policyholder’s property, the insurance company must immediately pay the entire cost of the damage, and upon completion of payments, the policyholder will give the insurer an amount equal to the deductible.
Preferential franchise
A preferential franchise allows participants in the insurance process to stipulate those cases when the franchise will not be used by the insurance company. For example, if it is not the policyholder himself who is to blame for the accident, but the owner of another car.
Regression franchise
Regression franchise: the idea of such a franchise is that the policyholder himself chooses the size of the franchise (from 5% to 40% of the insurance amount), and the cost of the insurance policy directly depends on the size of the franchise (the higher the deductible, the less price). Also, if, due to the fault of the policyholder, damage was caused to a third party, the insurer will fully compensate the loss to the victims, and will charge the policyholder the full cost of the franchise.
At first glance, it seems that the deductible is beneficial only to the insurer, since it exempts him from some part of the payments. But sometimes the insurer may spend an amount twice as large as the loss itself to cover minor losses. And this entire amount for registration of losses falls on the shoulders of the insured. Therefore, it is sometimes easier for the policyholder to compensate for minor losses himself. And at the same time, he will also receive a discount when concluding an insurance contract. That is, the amount of the deductible is usually equal to the amount of money that the policyholder can spend to compensate for the damage themselves.
Motor insurance under CASCO receives everything greater distribution, 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 car loans put a necessary condition To obtain it, compulsory CASCO insurance of the purchased vehicle is required for the entire loan period.
Despite its many advantages, this type of insurance retains its main drawback, expressed in its high cost for the average consumer. average cost An annual CASCO policy is about 10% of the price of the car, which is a fairly substantial amount given the constant upward trend in prices for new cars. This is the only thing that holds back most motorists from trying to insure their car against various risks.
Against this background, more and more car owners are beginning to become interested in what a car insurance deductible is. in a general sense, and more specifically, what is a deductible for CASCO insurance . This service provides the buyer with the opportunity to receive a significant discount on the purchase of an insurance policy. How profitable is this, when can you use this service and how to pay for it - we will try to find out these questions in the following material.
What is the deductible for CASCO car insurance?
Franchise as a way of providing benefits for conducting entrepreneurial activity, has found its application in the insurance system. Thus, in CASCO, the use of a franchise is an insurance option when, in exchange for benefits for purchasing a policy, the client insuring his car (franchisee) must bear a certain share of the costs of restoring the car damaged as a result of an insured event. Thus, the insurance company (franchisor) reimburses the insured amount not in full, but only partially.
To make it more clear what a deductible is in CASCO car insurance, we can give the following example. Let the client decide to insure his car, the price of which is 500,000 rubles, against accidents due to unconditional franchise in the amount of 20,000 rubles. Then, according to 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 the insurance will not be paid. If the cost of repairs is estimated at 70 thousand rubles, then the insurance company will only pay the amount that exceeds the established threshold, i.e. 50 thousand rubles, and the balance is 20 thousand rubles. The client pays extra.
Video: Excess for CASCO insurance
So, the main idea of the franchise for CASCO insurance is as follows: the higher the amount of the established franchise threshold, the greater the benefit provided to the client when purchasing a policy. In this case, the franchise threshold can be determined as:
- specific amount;
- percentage of the cost of the car;
- or the cost of 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 it is mainly determined in the amount of double the amount of the deductible threshold.
Franchise options for CASCO insurance
There are several main types of CASCO franchising:
1. Conditional franchise
The meaning of this insurance option is to set a fixed amount of damage caused when an insured event occurs. If the damage incurred does not reach the established threshold, the policyholder will completely restore the car at his own expense. If the damage assessment shows that the cost of repairs exceeds the established threshold, then the restoration is fully paid for by the insurer, and the policyholder does not take any part in financing the repairs.
For example, if a CASCO agreement is concluded under a conditional franchise with a threshold of 5,000 rubles, then if a minor accident occurs with damage of 4,900 rubles, the owner of the car pays for its repairs out of his own pocket. If the damage is estimated at 5,100 rubles, then the restoration of the car falls entirely on the shoulders of the insurance company.
The conditional franchise option is undoubtedly an advantageous 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 policyholder is not excluded, when he deliberately causes damage to the car in order to bring the amount of damage to the limit established by the contract in order to shift the repairs to the shoulders of the insurance company. Therefore, insurers try to avoid this insurance model.
2. Unconditional franchise
This insurance option requires the mandatory participation of the car owner in its restoration by paying the full or partial cost of repairs. The portion of restoration costs that is paid by the owner may be a fixed amount, a percentage of the value of the car or the damage caused.
Example: fixed unconditional franchise for 10 thousand rubles. In this case, if the damage resulting from the 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 10 thousand will be paid by the car owner, and 20 thousand rubles by the insurance company.
The difference between an unconditional deductible and a conditional one is that the policyholder always pays out of his own pocket part or the full cost of repairs, depending on the ratio of the amount of assessed damage and the threshold deductible amount established by the contract.
When setting the deductible threshold as a percentage of the cost of the car, depreciation of the car is taken into account. In this case, the deductible amount (a threshold amount determined in percentage terms) decreases over time in proportion to the cost 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 car owner will pay for a strictly fixed part of the restoration repairs for each insured event. For example, with a 10 percent deductible for damage estimated at 50,000 rubles, the car owner must pay 5,000 rubles to repairmen, and the insurance company - 45,000 rubles.
3. Dynamic franchise
This insurance option involves taking into account the policyholder's impeccable driving history. The fewer insured events a client has in previous insurance periods, the greater the confidence in him from the insurance company, the greater the discounts and bonuses offered for the purchase of a policy. A dynamic franchise encourages policyholders to drive a car without accidents, since a high percentage of insurance is paid to them only for the first and second insured events, 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 for which the insurance contract is valid. For example, if the owner of a car uses it only on weekdays, then he can enter into 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 an accident occurs on weekends, then the repairs are carried out by the owner at his own expense, and the insurance company does not pay insurance. This system allows you to reduce the cost of the policy for the client compared to the standard system.
There may be other franchise options for CASCO insurance. For example, options for providing benefits through a CASCO franchise involve payment of a limited amount of the insured amount only if the insured is the culprit of the accident. In this case, the cause of the accident should not be malicious traffic violation. If the accident in which the policyholder's car was damaged was caused by another person, then the resulting damage is compensated by the insurance company in full without taking into account the deductible.
Video: Ways to save on CASCO - Method 1: Franchise
Who benefits from a car insurance deductible?
1. For insurance companies
A deductible allows the insurer to get rid of payments for minor damage cars when the amount of damage does not exceed the established 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 flow, which requires certain material costs, which in some cases may exceed the amount of insurance payments made. Therefore, it is not profitable for insurance companies to investigate and pay small insurance amounts. It is important for them to have fewer insurance claims with a stable flow of insurance premiums.
2. For vehicle owners - policyholders
A deductible for the policyholder can be both profitable and unprofitable. It all depends on the specific insurance options under the franchise, the experience and qualifications of the driver, driving mode and many other factors. The advantages of an unconditional franchise for policyholders are:
- Saving time and money due to the fact that for minor damages there is no need to contact the traffic police and the insurance company in order to obtain insurance and make repairs. This point applies mainly to the unconditional franchise. These procedures may take too much time and additional costs that are not beneficial to the policyholder 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 minor damages caused are not recorded in the policyholder's history, and it is considered accident-free. Therefore, a new policy can be purchased at an even greater discount.
Disadvantages of a franchise
The main disadvantages of CASCO insurance with a franchise include:
- This form of insurance is unavailable 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 repair various minor damages that reduce the market price of the car. In addition, the cost of the policy for the entire loan period is paid by the lender, and the franchise is not profitable for them.
- There is a possibility of underestimation of damage caused by 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.
In what cases is it better to choose insurance with a deductible?
- If you have the finances to carry out minor repairs on your own.
- Minor accidents with minor injuries occur frequently, especially among novice drivers. They worsen your driving history and cause the price of the policy to increase by next year. Therefore, the franchise helps to avoid such a rise in price in cases of minor accidents.
- If you have extensive experience and experience of accident-free driving, when the driver is confident that he will not be the culprit of the accident.
- A CASCO contract for the risk of damage, concluded for a large deductible amount, may contain as a bonus insurance against theft, theft or destruction, which can be beneficial for a certain category of car owners.
Video: CASCO calculation - reducing the cost of an insurance policy through a deductible.
How to calculate the franchise correctly?
To do this, you need to proceed from three main values indicated in the insurance contract:
- type of franchise;
- franchise amount;
- insurance amount of the contract.
For example, we have the initial data:
- insurance amount – 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 damage, then let it be equal to 20%.
In this case, two calculation options are possible:
- Deductible or conditional view calculation when the amount of the deductible is subtracted from the estimated amount of damage. For damage of 20 thousand rubles, the insurance payment will be 20,000-5,000 = 15,000 rubles. For damage less than 5,000 rubles, insurance is not required.
- An unconditional type of calculation, when the deductible amount is determined as a percentage of the amount of damage and amounts to 20,000 x 0.2 = 4,000 rubles. The amount of insurance payment will be 20,000-4,000 = 16,000 rubles. The policyholder pays the remaining 4,000 rubles 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 to insure the car. However, to obtain insurance when an insured event occurs, you need to keep a “cool head” in order to fulfill all the conditions that are discussed in the contract to receive compensation.
An insurance franchise is an amount pre-agreed in insurance contracts that is not subject to reimbursement by the insurance company upon the occurrence of an insured event. Simply put, this is the amount that your insurer will underpay you during settlements.
Let's say you insured a car and set a deductible of 10 thousand rubles. If you damage it slightly and the repairs will cost, say, 5 thousand, then you will do it yourself without contacting the insurance company. If your loss amounted to 100 thousand rubles, the insurer, minus the deductible, will pay you 90 thousand.
It would seem, why then is an insurance deductible needed? In fact, it is beneficial to both the client and the insurance company itself.
Firstly, by agreeing to the deductible, the client receives a significant discount on the insurance policy. The amount saved in this way can be comparable to the size of the franchise, and it can be set aside for minor repairs.
Secondly, it is not your time to contact your insurance company about minor repairs. Not having to fill out a bunch of paperwork can also be considered a plus.
The benefits for the insurance company are obvious. Mainly, this frees employees from accompanying minor insurance cases, the registration of which requires no less resources than serious accidents.
Abroad, the franchise is prescribed in most insurance contracts, but in Russia it is not yet popular enough.
Conditional and unconditional franchise
A conditional deductible is applied if the amount of damage smaller size franchises. Let's say, if you insure your car for 1 million rubles and set a deductible of 10 thousand rubles, then if the damage is 9 thousand you will not receive anything, but if the damage is 10 thousand 100 rubles you will receive the entire amount.
In practice, clients try by hook or by crook to increase the amount of damage in order to receive insurance, which is why conditional deductibles are not very widespread in our country.
The unconditional deductible is calculated from the amount of insurance compensation in all cases. In the example with the same car, if the damage is 9 thousand, you will also receive nothing; if the damage is 10 thousand, 100 rubles you will receive 100 rubles, and if the damage is 100 thousand, you will receive 90 thousand rubles.