Conditional deductible in insurance is Types of insurance contracts

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

Deductible is one of the tools used in insurance. It is used by insurance agents in order to draw the attention of customers to more attractive conditions and a lower policy price. The franchise is especially relevant in the field of compulsory insurance, for example, in car insurance. A conditional deductible in insurance is one of the varieties of the named instrument. Today there are two types of it: conditional and unconditional.

What is a conditional franchise

First of all, the franchise itself should be defined. As an insurance tool, it received official status in Russian legislation back in 2014, when changes were made to the text of the law on insurance. A deductible is a part of the loss (damage) resulting from the occurrence of an insured event, which is not paid by the insurance company. Payments come only if the amount of the loss exceeds the cost of the franchise. The amount, when and how the money will be paid depends on the type of insurance contract and the conditions specified in this contract.

On the firstIt looks like it is unprofitable for the insured, but in fact it can be more profitable than buying a regular policy. A deductible policy is much cheaper, especially in case of minor accidents, when the damage is insignificant (a couple of light scratches). Such an insurance policy makes it possible to solve the problem without involving the specialists of the insurance company, which means saving time and money on paperwork.

Simple conditional franchise

Payments for a simple conditional franchise are calculated as follows: if the loss is less than the cost of the franchise, the damage from the occurrence of an insured event is paid by the insured, if more, the full amount of losses is paid by the insurance company, but within the amount of insurance.

Calculation example

The car was insured with a simple conditional deductible. Its size is 35 thousand rubles. As a result of an insured event, a loss was received (the amount of damage was 25 thousand rubles). In accordance with the terms of the contract, the insurance company does not pay for the loss caused to the property. If it had amounted not to 25 thousand rubles, but to 40 thousand rubles, then the insurance company would have paid the full amount of the loss - 40 thousand rubles.

What is the difference between conditional and unconditional franchise

The difference between conditional and unconditional deductibles in insurance is that the payments for unconditional deductibles are always made according to the same formula. By default, if any special conditions are not prescribed in the insurance contract, then such a deductible is considered unconditional. With it, the payout is equal tothe difference between the cost of the franchise and the amount of damage. Naturally, if the damage is less than its value, then there can be no question of any insurance payments.

Calculation example

There was an accident. The amount of damage amounted to 75 thousand rubles, the size of the unconditional deductible - 50 thousand rubles. The insurance company will have to pay only 25 thousand rubles (75-50). An unconditional deductible is considered the most beneficial for insurance companies, as it allows them to shift part of the cost of insurance payments from the wallet of the insured person.

Temporary franchise

Such a conditional deductible in insurance is a condition under which it is relevant for a certain period of time. For example, the first 3 months from the date of issue of the policy. During this time, it is valid, and the remaining 9 months, the usual insurance regime is applied, that is, without a deductible.

Dynamic franchise

Dynamic conditional deductible in insurance is a deductible, the size of which changes depending on the number of insured events per year. Most often it is expressed as a percentage. For example, the first time you get into an accident, it is 10%, the second - 30%, the third - 50%. However, three or more accidents in a year is very rare, although it all depends on the nature of driving. If the driver loves speed, then buying such a policy will be unprofitable for him.

Calculation example

A dynamic deductible was issued when buying an OSAGO policy. In case of participation in an accident, the driver paid 5% of the cost of damage, in case of a repeated accident, the deductible increased to 35%. If athe driver got into an accident for the third time in a year, it was equal to 80% of the amount of damage.

The insured car got into an accident, the amount of loss was 70 thousand rubles. Franchise size in rubles: 700000.05=3500 rubles. The insurance company paid out 66.5 thousand rubles. Within a year, the car was in an accident again. Losses - 100 thousand rubles. In accordance with the terms of the contract, the insurance company will pay only 65 thousand rubles, the remaining 35 thousand rubles, necessary for car repairs, must be reimbursed by the insured.

High deductible

This franchise is used in property insurance contracts, which are very expensive. For example, antiques, expensive cars, luxury real estate. In the event of an insured event, the policyholder first compensates for the damage with his own funds, and then, by providing documents confirming that the event is insured, receives payments. Damage can be reimbursed in full or in part, paid - immediately or in installments (it all depends on the terms of the contract).

Calculation example

As a result of an insured event, damage was received in the amount of 1 million rubles. The value of the high conditional deductible is 10%. The owner of the damaged property bears all the costs of eliminating the damage at his own expense. Under the terms of the contract, he must be paid 90% of the amount of damage within six months in installments. Payments will be made in the amount of 150 thousand rubles monthly. 100 thousand rubles is the size of the franchise (10%). Under the terms of the contract. 900 thousand rubles isthe amount of the insurance payment. Since, under the terms of the contract, the insurer must pay the entire amount in installments, the monthly payment will be 150 thousand rubles.

Pros and cons of a franchise for an insured

At first glance, it may seem that it is unprofitable for the policyholder to use a franchise in an insurance contract. He is offered a policy with a “stripped down” functionality. This means that in the event of a minor accident or minor damage, you will have to pay for repairs out of your own pocket. The first thought of any client: all the benefits go to insurance companies, which thus move away from full payments. In fact this is not true. A conditional deductible in insurance is beneficial, but only for those who responsibly treat the insured property. For example, careful drivers will benefit from being able to purchase a comprehensive insurance policy at a lower price than if they had not used it.

An insurance contract with a franchise is also beneficial for those who, for whatever reason, rarely use a personal car. Since car insurance is mandatory under Russian law, such a policy can provide significant savings. At the same time, even if you get into an accident, it will be easier and cheaper to make inexpensive repairs than to overpay for several years for unnecessary services. That is, you pay extra money for an expensive policy if the probability of getting into an emergency is low.

Who pays and how

Motorists are interested in questions not only about how much andwhen the insurance company pays, but also about who will pay for repairs if one of the participants in the accident (or both at once) has an insurance policy with a deductible. How to get insurance in such a situation and what is its size? Insurance - regardless of whether one of the participants has a conditional or unconditional deductible - the insurance company pays, and then collects the amount of loss from the culprit of the traffic accident, without understanding whether he has a deductible or not. Damage will be reimbursed in full, taking into account the amount of the deductible.

How to get an insurance policy with a franchise

Many companies have special insurance programs that provide for an unconditional or conditional deductible. In insurance, this is not considered something unusual, although in Russia it appeared quite recently, and not all insurers today were able to appreciate its advantages. It is used for both property and personal insurance. When applying for a policy, you only need to clarify: a contract with a franchise or not. If with it, then what it is and under what conditions it is provided. Paperwork is almost the same as when buying a policy without it.

Franchise cannot be issued on property taken on credit. This applies to both real estate and cars. Before the loan is fully repaid, it is illegal to establish a franchise - both conditional and unconditional.

Don't confuse insurance franchise with business franchise. Even though they are pronounced and spelled the same, they arecompletely different instruments. In business, this is the purchase of someone else's brand or someone else's system for organizing activities, production processes. What is it, a deductible in insurance, in simple words, can be expressed as the amount of loss not covered by the insurance company. The insured himself pays for the damage, which is less than the amount of the deductible.

Features of insurance in Russia

All insurance companies operating in Russia have one peculiarity: almost none of them offer clients to issue a policy with a conditional franchise. Perhaps this is due to the fact that the insurance market is already suffering impressive losses and maneuvering on the verge of survival. Or maybe the point is the imperfection of the legislation, because this method of insurance appeared quite recently, and in general the insurance services market in Russia appeared a short period of time ago and there is no trust between insurance companies and policyholders.

The most widespread in Russia is the unconditional franchise. Almost all Russian insurance companies have unconditional deductible programs in their arsenal, so getting insurance is not difficult. The price of such a policy often falls below half of its normal cost. But there is nothing to rejoice at this. The cheaper the policy costs and the larger the deductible, the greater the burden on the policyholder's wallet in the event of an insured event.

For example, the price of a comprehensive insurance policy is 100 thousand rubles. The company offers to issue a franchise in the amount of 60%. Here the price of the policy will beonly 40 thousand rubles. But such savings will be ruinous for the client in the event of an accident. If the amount of damage is less than 40 thousand rubles, the insured will have to make repairs at his own expense. If more, the client will pay 60% of the total amount of the loss. Therefore, the franchise is beneficial only to experienced, responsible drivers, as well as in those regions where the accident rate is low. In other cases, the deductible for the policyholder will be unprofitable.