CASCO with a franchise - what is it? How does a franchise work in CASCO?

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

Before insuring a car, it is worth familiarizing yourself with the basic terms that are used in this procedure, in particular “franchise”. Insurance agents will definitely tell you about all the benefits of purchasing a policy. But it is not a fact that they will explain the nuances of using CASCO with a franchise. What it is and on what conditions this service is issued, read more in this article.

Definition

Franchise - the amount of money that a person will have to compensate on their own in the event of an insured event. It can be expressed as a percentage or as an absolute value. Its size is agreed in advance and indicated in the policy. The client receives a discount if he agrees to purchase CASCO with a franchise in RESO.

Views

Conditional franchise: all payments that exceed its size are fully compensated by the company. But if the cost of restoring the car is insignificant, then the insurer will not receive anything under the policy. Example: the franchise is 10,000 rubles, and the cost of repairs is 8,000 rubles. Under the terms of the contract, in this case, the client will not receive anything. But if the amount of costs is 12 thousand rubles, then the insurance company will compensate the damage in full and will not deduct the cost of the franchise. In practice, this option is not always used, as there are often cases of fraud when the client specifically increases the amount of damage to the deductible level.

Most of all, customers prefer to buy a CASCO policy with a franchise. What does it mean? In any insured event, the client will receive compensation minus a predetermined amount (unconditional deductible). Example: a deductible in the amount of 3 thousand rubles is registered in the policy. The cost of restoring the car is 10 thousand rubles. The client will receive only 7 thousand rubles of them. The rest of the amount he will have to compensate himself. Such policies are purchased more often.

Additions

CASCO insurance with an unconditional franchise is of two types. The part of the costs that the client will recover on his own can be expressed as a specific amount or as a percentage. In the second case, the depreciation of the car is taken into account. The amount of the franchise and the period of use change in direct proportion.

Example: the policy has a CASCO insurance deductible in the amount of 15% of the amount of damage. It will take 50 thousand rubles to restore the car. From the company (SC), the client will receive 50(1-0, 15)=42.5 thousand rubles. And the rest - 7, 5 - will pay on its own.

This is how the CASCO franchise works.

Pros

Depending on the specific situation, driving experience, needs and capabilities of customers, such policies have several advantages.

1. Savings on purchases. A policy with an unconditional deductible is always cheaper than without it. Typically, the reduction is two times the fixed amount. This will be especially noticeable when calculating costs for young drivers (up to two years). For them, multiplying factors are usually set. The discount grows in proportion to a fixed amount. You can calculate the approximate cost of the policy using the online calculator on the website of the insurance company. But when purchasing such a product, you should be prepared for the fact that in any case you will have to compensate part of the costs yourself.
2. Saving time. With small scratches on the body or other damage, the client will not have to contact the company at all to receive compensation. CASCO franchise reimbursement in such cases is not provided.
3. According to statistics, franchised cars have fewer accidents. There is a psychological factor. The driver understands that although the car is insured, he will have to compensate part of the costs on his own. It can be said that the franchise makes people drive more carefully.

Insurance company benefits

Having a franchise saves her from having to run bureaucratic red tape to pay a small refund of 2-3 thousand rubles. Document processing mechanismalways the same. But the costs of this procedure can greatly exceed the amount of the payment itself. CASCO with a franchise saves office costs. The same benefit applies to the client himself. A person does not have to prepare a bunch of documents each time in order to receive a refund in the UK. Especially take into account that the paperwork process, if the car needs repair, can take several months.

Other options

In addition to the traditional franchises discussed, SK offer other policies. They are designed for specific customer groups.

Dynamic CASCO deductible, or payment from the second case. The essence of this proposal is that the first damage in a row is compensated by the IC in full. The franchise starts from the second. Sometimes its percentage increases with each client's appeal to the UK. At the same time, it can change exponentially.

Preferential franchise is used only if the client is not the culprit of the accident. The UK is obliged to fully compensate for the damage, even if the second driver fled the scene.

Depending on the time when the insured event occurred, a separate CASCO with a deductible can be used. What does it mean? The policy specifies not only the types of damages, but also the time in which they occurred. If the insured event occurred earlier or later, then the client pays all the costs himself.

Example: The driver only uses the car on weekdays. On weekends, he travels by public transport. He decided to issueCASCO with a temporary franchise. If the insured event occurs on a weekday, then the company compensates all costs. But if the driver has an accident on Sunday, the money to restore the car will have to pay out of pocket.

When to buy a policy

• Subject to the availability of free funds to cover part of the costs. The discount provided when purchasing a policy will be spent on repairs. But the insured event may not occur. Then the benefit is obvious.
• Confidence in driving skills and having a long accident-free record. If the driver feels like a fish in water behind the wheel, then a CASCO policy with a deductible will help save money. There is always the possibility of an accident. But if a safe driving style has been proven by many years of experience, then a franchise will help save part of the family budget.
• Full CASCO includes "Damage" and "Theft". Suppose a client wants to insure only against the first risk, since he is confident in his skills and will not pay attention to minor scratches on the body. Then it is worth buying a full CASCO with a large deductible (7% or more) that compensates for the “Damage”. "Theft" can not be insured in all companies, more precisely, this service is provided in a package with others. Therefore, in such cases, it is worth purchasing a full policy.

When a franchise should be abandoned

According to statistics, this service is not profitable for customers who often get into an accident. In particular, this applies to inexperienced drivers and those whofeel insecure while driving. It is better for such people to purchase a policy at the full price, taking into account all coefficients. Minor accidents with such clients occur several times a month.

Is the franchise profitable

There are different types of policies on the market that may suit certain clients. It is better for experienced drivers to purchase a full CASCO, which fully compensates for damage caused by third parties. People who have recently obtained rights should pay attention to insurance with a dynamic deductible. A big discount is not provided for them, but the psychological factor will still work. For drivers whose main risk is the possibility of theft or destruction, it is better to purchase CASCO with the maximum deductible amount, for example, the 50/50 program.

Amount Ratio

Each IC calculates its own limits on damages. Cases where a deductible of 0 or 100% would be used are extremely rare. But the same rule always applies: the lower the cost of the object, the more costs the client will have to compensate. CASCO with a franchise in RESO is usually provided on the following terms: 0.5-1% of the cost of restoring the vehicle as a result of an accident, illegal actions of other persons, and 5% for the risk of theft is compensated by the client himself. If this cost item is 0%, then for expensive cars the price of the policy can reach 6% of the cost of the vehicle, domestic - 3.96%.

Loan car insurance

It's still worth delving into all the nuances of the policy. Especially if the transportthe product is purchased on credit. Banks have their own lists of insurer partners, with which the terms of cooperation are approved in advance. Clients can conclude an agreement with the largest companies on the market by purchasing CASCO from Sberbank OJSC. A franchise for such transactions is mandatory. Although the cost of the policy can be reduced without increasing your own risks. For example, if a client wants to insure a car only for the amount of the loan, that is, 70-80% of the car's price. But in this case, the bank will be more protected. The payment will be made in proportion to the size of the loan minus the deductible. In this case, the funds are transferred either to the account of the service station that was engaged in the restoration of the car, or to the bank if the vehicle was stolen or completely destroyed. But if the payment amount does not cover the loan balance, then the client will still have to repay part of the debt from his own pocket.

The miser pays twice

When an agent says: “We are ready to reduce your tariff a little”, the client must understand that in this case he will have to compensate most of the funds himself. A small savings in the early stages will be expressed in an increase in the rate (amount) of the franchise. Unfortunately, the insurance culture in Russia is underdeveloped. Since people do not fully understand the essence of all concepts and the relationship between payment and deductible, they agree to the proposal of agents to purchase a policy with 5-10% of personal expenses.

50 to 50

Only in OSAGO the amount of the deductible is fixed in advance. But in this case, the car is insured againstthat he might hit someone. Most often, drivers purchase this policy for the period of inspection. Therefore, the key factor for them is the price. The same rule applies here. By lowering the price of the policy, the insurance company increases the deductible. But such insurance can only be suitable for experienced drivers. But even those realize their mistake only when an insured event occurs, when it turns out that the policy covers only 50% of the costs.

Conclusion

To insure the car against damage that may be caused to it as a result of the actions of third parties, you must purchase a CASCO policy with a franchise. What it is? In the event of an accident, the client can apply to the insurance company for compensation for the cost of restoring the vehicle. After registration of all papers, the payment will be made within the sum insured, but minus the deductible. That is, the insured person will still bear part of the losses, but their amount will be specified in the contract in advance in the form of a fixed amount or interest.