What is the difference between a deductible and a franchise?

A deductible is subtracted from every payment. A franchise is a threshold: below it nothing is paid, above it the whole loss is paid with nothing deducted. On a loss just above the figure the franchise pays materially more.

Does the deductible apply per shipment or per event?

It depends on the wording. Per conveyance or per event is common on open covers, and it matters when one incident damages several consignments travelling together — one deductible instead of several.

Is raising the deductible a good way to reduce premium?

It is the honest way, because it does not change which perils respond. Reducing the clause level also reduces premium, but it does so by removing cover — theft, non-delivery and handling damage all disappear between (A) and (B).

Can I have a nil deductible?

On small consignments, sometimes. Above modest values it is rarely offered and is priced accordingly, because the insurer would then be handling every trivial claim.

Deductibles, franchises and the first slice of a claim

The deductible is the most honest lever on premium, because unlike dropping the clause level it does not remove any cover. The franchise is its older cousin and behaves completely differently on a loss just above the line.

Deductible vs franchisePer event vs per conveyanceIndicative rate factors

Deductible

A fixed amount subtracted from every claim payment. It removes the attritional small losses that cost more to handle than to pay, and it is the reason a policy does not become a maintenance contract for scuffed cartons.

Franchise

A threshold rather than a deduction. Losses below it are not paid at all; a loss above it is paid in full, with nothing taken off. Still found on bulk and commodity trades, where a trade allowance for ordinary loss is expected.

The same loss, both ways

Figures are round illustrations of the arithmetic, in whatever currency the policy is written in. They are not a quote and not a claims statistic.

Mechanism	Loss of 900	Loss of 1,200	Loss of 50,000
Deductible of 1,000	Nothing paid — the loss is below the deductible.	200 paid. The deductible is subtracted from every claim.	49,000 paid.
Franchise of 1,000	Nothing paid — the loss is below the franchise.	1,200 paid in full. Once the threshold is passed, nothing is deducted.	50,000 paid in full.

What each level does to the rate

These factors come from this platform's own rating tables and are used to produce the indicative premiums shown elsewhere on the site. They are our model, not a market survey, and no insurer has agreed to them.

Deductible	Rate factor	When it fits
Nil	×1.22	Rarely available above modest values, and priced accordingly.
$250	×1.08	Small enough that most real claims still pay out in full.
$500	×1.00	The reference deductible for these figures.
$1,000	×0.92	A common choice once a consignment is worth six figures.
$2,500	×0.82	Self-insures the nuisance claims; keeps cover for the serious ones.
$5,000	×0.72	Only sensible where you can absorb a mid-size loss without flinching.

Try it on your own figures

Per event, or per consignment?

Read this in the wording before you need it. When one incident damages four consignments on the same trailer, a per-event deductible costs you one deductible and a per-consignment deductible costs you four. On an open cover carrying many small declarations it is a material difference.

The wrong way to save premium

Dropping from Clauses (A) to (B) is cheaper and removes theft, non-delivery, ordinary handling damage and fresh-water damage from the cover. Raising the deductible is cheaper and removes nothing but the small claims. One of those trades is visible on the day of a loss; the other is not.

What each clause level covers →

Common questions

What is the difference between a deductible and a franchise?: A deductible is subtracted from every payment. A franchise is a threshold: below it nothing is paid, above it the whole loss is paid with nothing deducted. On a loss just above the figure the franchise pays materially more.
Does the deductible apply per shipment or per event?: It depends on the wording. Per conveyance or per event is common on open covers, and it matters when one incident damages several consignments travelling together — one deductible instead of several.
Is raising the deductible a good way to reduce premium?: It is the honest way, because it does not change which perils respond. Reducing the clause level also reduces premium, but it does so by removing cover — theft, non-delivery and handling damage all disappear between (A) and (B).
Can I have a nil deductible?: On small consignments, sometimes. Above modest values it is rarely offered and is priced accordingly, because the insurer would then be handling every trivial claim.

Figures shown here are produced by our own rating tables and are indicative only. They are not market quotes, no insurer has agreed to them, and they do not bind cover. InsuranceScanner is an insurance intermediary, not an insurer — see the Terms for our role. Nothing here is a personal recommendation that a particular cover, sum insured or deductible is suitable for you. Where anything on this page conflicts with the certificate, policy schedule or wording issued by an insurer, that document governs.