Question 1

How does a franchise deductible treat a loss that falls just above its threshold?

Accepted Answer

It pays the entire loss in full, with no deduction applied at all — Once a loss reaches or exceeds a franchise deductible's threshold, the entire loss is paid from the first dollar — unlike an ordinary deductible, no amount is subtracted.

Question 2

What happens to a loss that falls just below a franchise deductible's threshold?

Accepted Answer

It is not paid at all — Below the threshold, a franchise deductible pays nothing whatsoever — there is no partial payment zone the way an ordinary deductible provides.

Franchise Deductible

The full write-up is free for members

Related terms