Hi All
As you know according to sub-article 28-j of UCP 600 " An insurance document may indicate that the cover is subject to a franchise or excess (deductible). "
Could you tell me the difference between franchise or excess with an example ?
Thank you
Franchise and excess (deductible) definitions
Hi mehdik,
Here are the definitions of each.
A franchise is a provision in the insurance policy whereby the insurer will not pay unless damage exceeds the franchise amount.
For example - You are shipping goods and your insurace is for $50,000. The insurance policy contains the franchise provision that claims must exceed 10% ($5000).
If the total value of the damage to the goods is $4000, you are responsible for the entire $4000.
If the total value of the damage to the goods is $8000, the insurance company is responsible for the entire $8000. You do NOT have to pay $5000 of your own money first.
An excess (deductible) is a provision in the insurance policy whereby the insurer will pay any amounts of damage that exceed the excess (deductible) amount.
For example - You are shipping goods and your insurace is for $50,000. The insurance policy contains the excess (deductible) provision that the insurance company will not pay the first 10% ($5000).
If the total value of the damage to the goods is $4000, you are responsible for the entire $4000.
If the total value of the damage to the goods is $8000, you are responsible for the first $5000 and the insurance company is responsible for the remaining $3000.
Please let me know if you have any other questions.
Best regards,
LC Sam
Excellent answer, Good enough for any book on the topic.
But this leads us to the question shouldn't we exclude art. 28 i and j) in the interest of applicants?
-Each long journey starts with a small step-
Best regards
Frammi
complete answer
Dear LC SAM
your complete reply was great.
Regards
Mehdik