What is an insurance deductible? Insurance company franchise: where to start, advantages

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: the amount of the transaction, the premium and the deductible.

The deductible 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):

3. What is the optimal franchise size for the client?

Of course, when signing an insurance contract, we want to receive as much money as possible in case of an accident in order 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.
• With a minimum amount, you will have to overpay for the policy itself, which is also not profitable in the future, because an accident may never happen.

Based on the calculations of experienced experts in this matter, there is a benefit if the value 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:

1. First of all, the monthly volume of transfers to the insurance company decreases. This is beneficial if insurance is just a formality.
2. You also won’t have to waste time collecting all the documents to prove the damage that was minimal for the victim.
3. It will be beneficial to conclude such an agreement if the insurance amount is over half a million.
4. 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 are a minimum of accidents and injuries, but at the same time the cash flow increases 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 the employees about existing types of policies, tariffs, and what will be more profitable for you...

Useful article? Don't miss new ones!
Enter your email and receive new articles by email

Insurance is an integral part of the life of every person in modern society. We strive to insure our property, our lives and those of loved ones as profitably as possible. Insurance can be compulsory or voluntary.

Every person who encounters this topic for the first time immediately has many questions: which company is best to contact? What type of insurance to choose? For how long? In order to make the right decision for yourself, you should get at least a basic understanding of what the insurance system is, how it works and what the benefits of using it are.

The concept of insurance is inextricably linked with such a term as deductible, which is that part of the insured's damage that is not subject to compensation by the insurance company in the event of an insured event. The policyholder voluntarily chooses insurance for himself with or without a franchise, and also independently determines its size and type. The franchise amount can be set in a fixed form, or as a percentage of the total

In practice, there is an unconditional and conditional franchise. The latter provides for the payment of funds by the insurance company only if the damage caused exceeds the amount specified at the conclusion. For example, you decided on one hundred thousand rubles and chose a conditional franchise in the amount of 20 thousand rubles. If in the event of an accident the damage caused to the car is less than the specified amount, i.e. less than the deductible amount, no insurance payment will be made.

An unconditional deductible in insurance is a part of the damage caused as a result of an insured event that is not subject to compensation by the insurer. For example, you also insured your car for 100 thousand rubles, and chose the type of unconditional franchise in the amount of 20 thousand rubles. In the event of an accident in the amount of up to 20 thousand rubles, payment of funds will not be made. If the amount of damage caused is, for example, 21 thousand rubles, the insurance company will pay you an amount of 1 thousand rubles. An unconditional deductible applies, as a rule, regardless of the amount of damage caused.

At first glance, this payment system may seem very unprofitable. In fact, an unconditional franchise gives careful drivers who rarely get into minor road accidents a good opportunity to save on purchasing insurance. The deductible is beneficial not only to the insurer, but also to the insurance company, since it allows a significant reduction in many claims due to a decrease in the number of claims.

Of course, everyone decides for themselves which type to choose. An unconditional franchise is more profitable for novice drivers with little driving experience, since, according to statistics, they are the ones who most often get into minor traffic accidents.

It should be noted that the insurance franchise is not particularly popular in our country, since most citizens simply do not understand the meaning of this term and all the benefits of its use. In addition, it is very difficult for Russians to come to terms with the idea that in some cases, even after paying, they will have to carry out car repairs at their own expense. In foreign countries, an unconditional deductible in insurance, on the contrary, is quite popular, since it allows you to significantly save your budget and maintain the status of a so-called break-even client even in the event of a minor accident.

When going to an insurance company to insure a car against damage and theft, every car owner should become familiar with the term “deductible,” which insurers love to include in the CASCO agreement. To avoid being misled by marketing and insurance professionals, arm yourself with objective information.

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

What is a franchise?

The deductible is an amount of money that will not be paid to the policyholder upon the occurrence of an insured event. It can be expressed in absolute value - rubles, dollars, or a percentage of the insured amount under the contract. The deductible, as well as its size, is established in advance in the CASCO insurance policy by agreement between the client and the insurance company.

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

Conditional (non-deductible) deductible means that all payments exceeding its amount are fully compensated by the insurer, and in this case it is not “deducted” from the amount of insurance compensation. However, if 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 equal to 10,000 rubles, damage that requires up to 10,000 rubles to repair will not be repaired at the expense of the insurance company. At the same time, if the amount of damage is 12,000 rubles, i.e. exceeds 10,000 rubles, insurers will compensate it in full. In fact, this option is almost ideal for the policyholder, but at the same time it is not so beneficial for insurers. Therefore, a conditional deductible is rarely used in car insurance contracts today.

Unconditional (deductible) deductible is 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 minus 10,000 rubles each time. It is more often used by insurance companies, since it is more profitable for them than conditional. A deductible deductible is less attractive to unscrupulous policyholders who want to defraud the insurance company.

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

Benefits of insurance with a deductible

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

There is no clear answer to the question whether a franchise is beneficial for a car owner. It depends on the specific situation in which the needs, capabilities, driving experience of the policyholder and other nuances play an important role. Depending on them, the deductible can become an advantage or disadvantage of the insurance contract. First, let's find out what positive aspects the unconditional franchise contains.

• Saving on a voluntary car insurance policy. If an unconditional deductible is included in the policy, its cost may significantly decrease for the policyholder. In this case, there is usually a correlation - the higher the deductible, the cheaper the insurance policy (you can estimate the cost of insurance for different deductibles using the online comprehensive insurance calculator). However, by including a deductible in the policy, you should be prepared not to turn to the insurer for payments for minor damage, but in case of serious insured events to receive compensation minus the deductible amount. For example, if the insurance amount under a CASCO agreement is 500,000 rubles, any payment for you will be reduced by 7,500 rubles with a deductible of 1.5%. However, any losses within this amount will not be compensated to you in principle.
• Saving time due to refusal to contact the insurance company for minor insurance events. Concluding an insurance contract with a deductible 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, you need to provide the insurance company with 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 the car for inspection by experts. These actions require a lot of time, effort and nerves, especially considering the possibility of standing in queues at each office. By setting a deductible, the policyholder automatically gains 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 taking out insurance with a deductible?

Before including an unconditional deductible in the contract, you need to make sure that such a decision will not negate 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 relevant to you, a franchise may be beneficial to you.

• Availability of free funds for independent minor repairs. Having included a small deductible in the CASCO agreement (0.5-2 percent of the cost of the car), the policyholder must be financially prepared to repair the car on their own in case of minor damage. It should be noted that the money saved when purchasing CASCO on a franchise, as a result of the discount received, will be spent on minor repairs. However, according to the theory of probability, the insured event may not occur during the term of the contract. Then the savings on CASCO insurance are obvious.
• Having a long history of accident-free driving and confidence in driving skills. If the policyholder’s driving experience is more than 15-20 years, and he feels at ease behind the wheel, 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 policyholder’s driving style 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 thefts and major accidental troubles on the road.
• The desire to insure a car only for the risk of “Theft”. Full CASCO includes two risks: “Damage” and “Theft”. If the policyholder’s plans were initially to purchase a policy against theft only, because he is confident in his driving skills and does not attach importance to minor damage to body parts, then a successful alternative solution would be to issue a full CASCO insurance with a large deductible (7 or more percent of cost of the car) according to the “Damage” risk. It is not possible to insure a car only against theft with all companies, so insurance with a large deductible is a solution 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 protection against theft, a policy with a large deductible will help you receive compensation in the event of total loss (total 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 insurance claims, the deductible is unprofitable for those who, according to statistics, get into accidents more often than others and contact 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 doesn't feel confident behind the wheel may lose protection with deductible insurance. Those drivers who are just starting their journey behind the wheel of a car often should not apply for CASCO with a franchise. It is safer to pay the full price for the policy to the insurance company, taking into account all increasing factors, and be confident in your insurance protection. As practice shows, minor accidents can happen to inexperienced drivers several times a month. This is especially true for drivers - women and men who received their license after 40 years of age. If there is an increased risk of insured events, it is better to calculate CASCO insurance at the full rate.

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

Aimed at protecting people's property interests from certain dangers. Insurance activity includes comprehensive insurance protection, consisting of insurance itself, co-insurance and reinsurance in the broad sense of this concept. A prerequisite for the functioning of insurance organizations is licensing of insurance activities. Licenses giving the right to carry out insurance are a guarantor of the solvency of the insurance company due to the necessary insurance reserves formed by it to carry out one or another type of insurance for future insurance payments. Currently, in Russia there is a mechanism that includes licensing of insurance activities, registration of organizations involved in insurance and control over their activities, carried out by All this together ensures the protection of the interests of policyholders. Licensing of insurance activities in Russia does not have any restrictions on the duration of its validity, unless this is specifically provided for by Rosstrakhnadzor at the time of issuing a certain license. Both voluntary and compulsory types of insurance are licensed.

Insurance, like many lines of business, includes a number of specialized concepts and terms. The insurance activities of insurers and policyholders necessarily include a deductible, since it goes through every contract and is stipulated in each product from the insurance line.

What is a deductible in insurance?

Translated from French, a franchise is a benefit. The deductible in insurance is the non-reimbursable portion of the damage. It is calculated as a percentage in relation to In other words, if an insured event occurs then, when calculating the insurance compensation, the deductible amount will be deducted from the total payment. Russians, as a rule, try to waive the franchise, unlike foreign clients of insurance companies. We think this is unnecessary and unnecessary, but if you think about it, everything is completely different. An insurance deductible provides an opportunity to save money. A small deductible provides more complete coverage of damage, but a high insurance rate; a larger deductible means less complete coverage of damage, but reduces the cost of the insurance policy.

There are two types of insurance deductible: conditional and unconditional.

With a conditional or non-deductible deductible, you will be compensated for damage only if it exceeds the deductible; otherwise, you will not be able to receive payments from the insurance company. For example, although it’s a little trite, but it’s easy to understand, you insured your shoes for the amount of 1,000 rubles with a conditional 1% deductible, which would be 100 rubles, and a little later you lost the heel. The repair amount will be significantly less than the deductible, so there will be no refund. And if you did not lose the heel, but tore off the sole completely, then the cost of repair will exceed the deductible amount and the insurance company will compensate you in full for the damage. Since reimbursement is made under certain conditions, the franchise is called “conditional”.

An unconditional or deductible deductible is deducted from the amount of payments for always, without any conditions. Therefore, projecting it onto the previously given example, we see that in case of minor damage there will be no payments from the insurance company, but in case of significant damage, the deductible amount will always be deducted from the actual amount payable for damage, i.e. in our case - 100 rubles.

If we evaluate the situation objectively, we see that the insurance deductible is beneficial for us. It is no less beneficial for the insurance organizations themselves, since they also have a real opportunity to save money.

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

Despite its many advantages, this type of insurance retains its main drawback, which is its high cost for the average consumer. The average cost of 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 deductible is in car insurance in a general sense, and more specifically, what a deductible is in 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?

Franchising, as a way of providing benefits for doing business, 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 under an 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 pay only 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:

1. specific amount;
2. percentage of the cost of the car;
3. 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 repairs. 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 a malicious violation of traffic rules. 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

The deductible allows the insurer to get rid of payments for minor damage to the car when the amount of damage does not exceed the 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 either profitable or 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?

1. If you have the finances to carry out minor repairs on your own.
2. Minor accidents with minor injuries occur frequently, especially among novice drivers. They worsen your driving history and cause an increase in the price of your policy for the next year. Therefore, the franchise helps to avoid such a rise in price in cases of minor accidents.
3. If you have extensive experience and experience of accident-free driving, when the driver is confident that he will not be the culprit of the accident.
4. A CASCO contract for the risk of damage, concluded for a large deductible amount, may contain 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:

1. A deductible or conditional type of 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.
2. 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.