Franchise Deductible

What Does Franchise Deductible Mean?

A franchise deductible is the amount the insured must pay before the insurer begins covering the full cost of damages. Unlike a standard deductible, once the franchise deductible threshold is met, the insurer covers the entire loss amount without further deductions. Standard auto policies don’t usually use this structure, so drivers thinking about their out-of-pocket costs more often compare options like raising their auto insurance deductible instead.

Insuranceopedia Explains Franchise Deductible

If a policy specifies a franchise deductible of $100, the policyholder will cover any costs up to $100 out of pocket. The insurance company only intervenes financially when the expenses exceed this $100 threshold. However, once the amount surpasses this deductible, the policy will cover the entire cost up to the policy’s limit. You’ll see franchise deductibles more often in property and marine policies than in everyday auto coverage. They show up, for instance, in some hurricane and windstorm coverage, where the threshold can affect how much money you actually recover after filing a hurricane insurance claim.