What is an example of a franchise deductible?

What is an example of a franchise deductible?

• A. Partial payment until the deductible is met
• B. Deductible is not applicable for claims
• C. No payment until loss equals or exceeds deductible amount, then loss is paid in full
• D. Fixed amount deducted from each claim submitted

Answer: (C)

A franchise deductible is a unique type of deductible in insurance where the insurer agrees to cover the loss in full once the claim meets or exceeds a specified deductible amount. This means that if a loss occurs that is below this set amount, the insurer will not pay anything. However, once the loss reaches or exceeds the deductible threshold, the insured receives the total amount of the eligible loss without further deduction. This system differs significantly from traditional deductibles, where only a portion of the loss is paid after the deductible is satisfied, and any claim below the deductible amount would not trigger a payment. Consequently, in the context of franchise deductibles, the insured does not pay a portion of the loss; rather, they receive full compensation above the deductible threshold, which aligns perfectly with the choice you chose.

A franchise deductible is a unique type of deductible in insurance where the insurer agrees to cover the loss in full once the claim meets or exceeds a specified deductible amount. This means that if a loss occurs that is below this set amount, the insurer will not pay anything. However, once the loss reaches or exceeds the deductible threshold, the insured receives the total amount of the eligible loss without further deduction.

This system differs significantly from traditional deductibles, where only a portion of the loss is paid after the deductible is satisfied, and any claim below the deductible amount would not trigger a payment. Consequently, in the context of franchise deductibles, the insured does not pay a portion of the loss; rather, they receive full compensation above the deductible threshold, which aligns perfectly with the choice you chose.