Franchise
A threshold, not a deduction — once you exceed it, the whole loss is paid.
Definition
An older device, still found on bulk and commodity trades. Where a franchise applies, losses below the stated figure are not paid at all, but a loss above it is paid in full with nothing deducted. A deductible always subtracts; a franchise either bars the claim or steps out of the way entirely.
Why it decides money
The two words are used interchangeably in conversation and mean different money. On a loss just above the figure, a franchise pays materially more than a deductible of the same size.
Related terms
- Deductible
- The first slice of every claim, borne by the insured.
More in value and premium
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