What is a conditional and unconditional franchise

The terms conditional and unconditional deductible are used in insurance. Franchise - an optional condition in the insurance contract, providing for the exemption of the insurer from compensation for losses in part of the cost of the franchise.

Conditional and unconditional deductibles in insurance is a relatively new phenomenon for Russian insurance practice. Most often, their use is justified by the goals of maintaining the interests of the client in insurance. Until 2014, the franchise was not enshrined in Russian law.

The advantage of the franchise is that the insurer provides benefits for the payment of insurance payments and reduces tariff rates.

Conditional Franchise

Under a conditional deductible, part of the losses is not reimbursed by the insurance company if their size is less than the established deductible. When the amount of damage is higher than the deductible, it is compensated in the amount of 100%. Thus, the insurer seeks to dissociate itself from minor, minor damage.

The insurance contract may also provide for other types of deductibles - for example, temporary, dynamic. But in practice they are extremely rare.

For example, the insured amount is 100 thousand rubles, the size of the deductible is 15 thousand rubles. If the loss from the insured event amounted to 10 thousand rubles, then the insurer does not pay compensation, because the loss is less than the cost of the contingent deductible. If the loss has reached 50 thousand p. - it is subject to 100% compensation.

The most common use of a contingent deductible is personal insurance. In this case, the contract specifies the number of days of illness for which compensation is provided.

In car insurance today, it is almost impossible to meet a franchise, although it has great advantages for the insured and the insurer. This is due to frequent fraud attempts, when the policyholder sought to cause greater loss to the car to increase the amount of damage.