about franchise

[yangkenn]

dear all:

i have a case study about franchise here is:
LC states "Insurance certificate covering ICC A clauses subject to 5% franchise...". if the insured amount is USD100.00, the loss is USD4.00.

QUESTION:HOW MUCH IS PAYABLE BY THE INSURANCE COMPANY?

[vivian]

dear all:

i have a case study about franchise here is:
LC states "Insurance certificate covering ICC A clauses subject to 5% franchise...". if the insured amount is USD100.00, the loss is USD4.00.

QUESTION:HOW MUCH IS PAYABLE BY THE INSURANCE COMPANY?

USD100.00X5% = USD5.00
the loss is USD4.00< USD5.00 , therefore,the insurer no need to pay anything .

[danohng]

For the Insurance subject to 5% franchise, if the loss is less than 5%, the insurance co. do not need to pay, if the damage exceed 5%, the insurance co. will need to cover the full losses. example if the loss is 20%, the insurance co. will have to bear the total 20% losses.

[yangkenn]

Dear all,
Thank you for your opinions and samples.
I was confused with the difference betweent franchise and excess.
after your clarification,now I understand as below:
for franchise 5%, if the damage exceed 5%, the insurance co. will need to cover the full losses?
for excess 5%, if the damage exceed 5%, the insurance co. will need to cover the losses over 5%?
Is my understanding right?

[danohng]

Yes - yangkenn, you got it right on the dot.