If you have had a car accident or claim of an owner, you have probably talked about your franchise. The deductible is the amount that is "inferred" or subtracted from the total amount of the loss. So theoretically, if you have a self asks where your vehicle sustains $ 1,500 damage value and you have a $ 500 deductible, the insurance company pays $ 1,000 application where you, the policyholder insurance would cover the other $ 500 (satisfying the deductible amount).
now that we know what a deductible is, we'll talk about why it exists. What is the point of a franchise? The reality is that helps you a deductible and the insurance company. When disaster strikes and a deductible applies, the two parties share the risk of that particular loss. The insurance company usually promises to pay for most of the loss, where you agree to pay for said amount to the loss, the amount that you chose because you feel you can afford to pay this amount off -pocket when a loss occurs. This obviously helps the insurance company because they do not have to pay as much for the claim. At the same time, it will keep your lower comprehensive insurance rates because the insurance company does not pay for request. Also, if you choose to take a higher deductible, it will help reduce overall insurance rate you are charged during this period of the policy.
If we take this idea and apply it on the million policyholders, it helps keep all the lower expense claim and thus helps keep insurance affordable for the customer.
one thing to remember when talking about franchises is a deductible applies only to the use of the cover first part. covering first part is the cover that supports damage to your own vehicle, the other vehicle not someone. There is usually no deductible for liability coverage on your auto policy or homeowners. Which is paid by the insurance company based on the provisions of the policy.
The franchise stipulation may look a little different depending on what state you live and which insurance company you have. Some franchises are indicated you agree when the application starts for example $ 500 or $ 1,000. Other franchises are on a percentage basis, where you agree to pay a percentage of the amount of insurance on the property for your franchise. This is most often seen with the owner policies. Let's say you make your house for $ 100,000 and you have a 1 percent deductible, you agree to pay $ 1000 as your deductible.
Property damage deductibles usually apply per event, or whenever an application is filed. This means that if you have three accidents in a period of insurance and a $ 1000 deductible applies for each claim, you would pay $ 1,000 to each separate. This is different from most insurance policies where there is an annual deductible you pay. Once this amount is reached, the insurance company should pay for the additional amount for the rest of the year.
I hope this explanation franchises in the world of insurance has been helpful. If you have questions about your deductible, consult your independent insurance agent!
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