What does conditional and unconditional deductible mean in car insurance?

What is it in simple words

A deductible is the part of the damage that the insurance company does not compensate for in the event of an insured event.

This means that the owner will spend a certain part of his personal money on restoring the car.

The amount of the franchise depends on the cost of the car. It is set in rubles or a percentage of the amount.

The owner of the car and the insurance company agree on its size before completing the documents. If the owner agrees to the deductible, the price of the policy is reduced.

Key Features

The price of a standard CASCO policy is affected by the cost of the car, so the owner will spend a large amount. Registration of a franchise will make the policy cheaper.

If you agree on a full deductible, the price of insurance drops by 2 times.

After receiving minor damage under a CASCO agreement, the owner spends a lot of time on paperwork.

Insurance companies spend at least 2,000 rubles on each case, so appeals on such matters are not profitable for them. A policy with a franchise solves this problem.

The owner of the car can repair minor damage at his own expense.

The main features of the CASCO franchise are:

1. Speed ​​of reimbursement. The insurance company will not constantly conduct an independent assessment of the damage, so the payment period is reduced.
2. Careful driving. Having a franchise makes drivers more responsible. If the deductible amount in the contract is large, the policyholder will cover expensive repairs on his own.
3. The policy is beneficial for those who are willing to pay for the repair of minor damage.

The franchise amount is 1–2% of the cost of car repairs after an accident and 5–7% in case of theft.

Sources

• europlan.ru: Franchise in car insurance: is it profitable or is there a catch?
• Official website of Tinkoff

Recommended for you

• How is the total loss of a car calculated under CASCO?
• Casco Cashback promotion from SK AlfaStrakhovanie extended until autumn
• The number of CASCO claims during abnormal snowfall in the capital region increased by 56.7%

Anna Bukhtiyarova An author with six years of experience, she writes informational texts for our website. Graduated from NSTU

and NSPU on

. Has been working at #VZO since 2021. Extensive experience in various topics, including finance, helps Anna write informative and user-friendly texts - from articles to descriptions of bank offers.

[email protected]

(15 ratings, average: 4.9 out of 5)

Advantages and disadvantages

This type of policy is becoming common among drivers. The main benefits of insurance are as follows:

• costs less;
• saving time for the insurer and the policyholder;
• a clean insurance history of the car owner, since minor damage is not recorded;
• guarantee of financial compensation in the event of a serious accident and total loss of the car;
• payment of compensation in a short time.

The main disadvantage of CASCO with a franchise is the difficulties with credit cars. Banks do not offer such insurance. The borrower may refuse to repair any damage at his own expense.

If the deductible amount is fixed, insurance experts can reduce the amount of damage.

Having a franchise is not always beneficial to the policyholder.

The decision depends on your driving experience and the terms of the contract. Such policies are not suitable for beginners in driving. The frequency of accidents is high in the first 2 years, and the owner will pay for repairs.

Conditional

This type of voluntary obligation is determined by the fixation of some agreed upon damage figure. If a road accident develops, the driver himself pays for the costs of restoration within the limits specified in the contract. If the costs exceed this amount, then the agency itself pays for the repair of the car without intervention from the client.

For a better understanding of the principle of operation of conditional CASCO, the following illustration is provided. The driver purchased a certificate with a benefit of 3 thousand rubles and became involved in a minor traffic accident, the damage from which is estimated at 2,900 rubles. The owner of the vehicle pays for the restoration of the body of the vehicle without contacting the company for compensation. If the cost of repairs exceeded the amount of the benefit and amounted to, for example, 5 thousand, the insurance organization would pay the entire amount.

This type of voluntary agreement is one of the most beneficial for both the agency and transport owners. However, the former try not to practice it because of possible variants of fraud, where the car owner deliberately increases the amount of damage above the final deductible amount. This case is significant in that an extra, deliberately added scratch guarantees the owner full repayment of repair costs.

A conditional deductible implies the payment of compensation for damage incurred only in excess of the amount of the obligation. If expenses are less than the mentioned amount, restoration of the vehicle occurs at the expense of the victim.

What types are there?

There are these types of franchises:

1. Conditional - if the loss exceeds the deductible, the cost of repairs is fully covered by the insurer. When the damage is less than the deductible, the owner of the car pays for the restoration.
2. Unconditional – the insurance company returns to the policyholder the difference between the amount of loss and the deductible. This type is suitable for motorists with extensive driving experience.
3. Dynamic – increases with each new insured event. Usually the first damage is covered by the insurer. The franchise is valid from the second time.
4. Preferential – the contract specifies the conditions under which the insurer does not pay money. This may be damage from an accident due to the fault of the policyholder or another reason if the insured event was without an accident.
5. Temporary – compensation occurs if the insured event occurs at a certain time. Otherwise, the owner of the car pays for the repairs.
6. High – the insurance company covers the losses, and the insurer returns the deductible after correcting the damage. This type should be issued to owners of expensive cars or trucks.
7. Regressive – the higher the deductible, the cheaper the insurance costs.

Unconditional

According to such insurance, the policyholder will not receive a certain amount in any case. Compensation is paid in the amount of damage minus the unconditional deductible.

Its size is influenced by the price of the car and parts, the degree of damage to the car. Insurance companies often offer this type. Insurance with an unconditional deductible is offered for cars that have been used for 3–4 years. For this type of transport, a deductible is set at 10%, and insurance risks are considered to be theft or complete loss of the car.

A high percentage of deductibles is found in CASCO for new cars. Having a fixed amount that the insurance company receives is necessary in 2 cases:

• the driver is under 25 years of age;
• The owner of the car received his license less than 3 years ago.

In this way, the insurer tries to protect itself from losses. If a lot of people drive the car, the deductible will be higher. Usually the CASCO price increases 2 times if there are more than 2 drivers. When a vehicle is equipped with a modern protection system, the price of a CASCO policy is reduced by 1.5 times.

The minimum cost of insurance is provided by parking the car in a paid parking lot or in a garage. The reason is that the risk of theft is reduced.

Conditional

It is characterized by the fact that the obligation to pay compensation arises under the condition of a large amount of loss.

The insurer covers the damage in full. If the repair costs less than the deductible, it is paid by the car owner. The cost of the policy depends to a lesser extent on the size of the conditional deductible.

If you purchase such insurance, its price is reduced by 1 - 5%. It is rarely used because it requires detailed indication of the conditions under which it operates. The conditional deductible is established for each event separately.

In the contract, the conditional franchise is indicated as “free x%”, where x is the percentage that the insurance company will keep for itself.

The main disadvantage of such a policy is the price. Establishing a deductible does not significantly reduce the cost of insurance. Before concluding a CASCO agreement, you need to weigh the risks. If, as a result of the insured event, the damage is significant, but does not exceed the deductible amount, the policyholder will spend personal money to restore the car.

The advantage of a conditional deductible is that in case of major damage, the insurance company will cover all costs.

Deductible deductible in car insurance: what is it?

This type is the most common. Its essence is that the driver undertakes to assume financial expenses after the occurrence of a traffic accident or other threat within certain limits. The latter refers to the amount that the driver is willing to invest on his own.

To make it as clear as possible, let's give an example:

You have issued a CASCO insurance with a limit of 50,000 rubles. Soon a bus ran into you on the road; it slightly scratched your bumper and rim. Touch-up of both elements will cost 10,000 rubles. This means that you must pay for this damage yourself.

A couple of months later, a tree fell on your car. The natural incidents clause was spelled out in your agreement with the insurance company. The service estimated the damage at 150,000. In this case, you are required to pay the cost of the franchise, and the balance, that is, one hundred thousand, will be paid by the insurers.

The company with which you have a contract is only obliged to pay the difference between the damage and the amount agreed upon and specified in the contract.

note

This option will be relevant for experienced drivers. If you rarely get into an accident and store your car in a garage or secure parking lot, then you can safely choose this service.

We also note that often the amount of this service is significantly less than the overpayment for a full policy. On average, drivers save about 65% of the cost of comprehensive insurance with the deductible option.

How does a franchise work, the amount of which is 15 and 30 thousand?

After the accident, the loss amounted to 20,000 rubles. With a deductible of 15,000 rubles, the insurer will compensate the damage in full, since its amount is less than the stated expenses. If the franchise is set at 30,000 rubles, the owner spends his own money on repairs.

The owner of the car can apply for compensation for two insurance events - for 5,000 and 40,000 rubles. The franchise is 30,000 rubles. The insurer will not compensate for the first loss, but will pay for the second in full. The rule here is that each case should be considered separately.

How to calculate the benefit amount

To determine the deductible amount, you should pay attention to several factors. For example, how long will it take for the compensation payment to be processed, what kind of loss can the owner of the vehicle incur while remaining without a means of production during this time. It is more profitable for a professional carrier to pay for the repairs themselves than to lose profit if they expect insignificant compensation.

It is recommended to calculate the franchise amount based on the following formula:

the size of the benefit is equal to the number of hours that can be spent on filing an incident - 5-12, multiplied by the average salary and divided by the number of working hours in a month - 160.

Let’s say the average salary of a carrier is 70 thousand rubles; it will take the maximum allowable time to file a traffic incident – ​​12 hours. Based on the available values, the franchise amount should be as follows:

(12x70000): 160=5250 rub.

The amount received for the indicated salary should be minimal. The opposite threatens loss of working time and lack of profit.

How to purchase a policy with a deductible?

To purchase a CASCO policy, you need to decide on an insurance company. It is better to familiarize yourself with its performance indicators and reviews on the Internet.

If you buy insurance from an insolvent company, no one will pay compensation. Then they go to the insurer’s office, where the agent explains in detail the terms of the contract.

The contract pays attention to the insured amount, the list of risks, and the amount of the insurance premium. It is also worth exploring the “payment on service station invoice” option, since not all service centers repair the specified car brand.

If the vehicle is more than 2 years old, the contract indicates “Station at the insurer’s choice.” This will reduce the cost of CASCO, and the car will be properly repaired.

The contract specifies the number and details of citizens who will drive the insured vehicle. When not all car users are listed in the policy, in the event of an insured event the insurer has the right to refuse to pay compensation.

The franchise is discussed separately. It varies from 0.5 to 10% depending on the price, make and age of the car. When concluding a contract, you must present the following documents:

• passport and copy of identification code;
• driver's license;
• vehicle registration certificate;
• documents that confirm the cost of the car.

If the car has an alarm system installed, documents for such equipment are shown to the insurance company. If after an accident it is not discovered that such protection is available, the insurer may refuse to pay.

Is it worth taking?

Such a policy is a profitable thing for those who want to save money. The larger the franchise, the less CASCO costs. But there are several nuances.

It is worth buying such insurance if you have the money to cover minor breakdowns. It is not possible to insure a car on credit. The insurer provides discounts to careful and experienced drivers. Therefore, the decision is made individually.

Every driver must secure their car in case of theft or accident. For this purpose, insurance companies have developed CASCO insurance with a deductible. It allows you to reduce the price of the policy and cover losses. But such contracts are not suitable for everyone, so you should carefully study the terms of the policy.

Obligation to insure a car under MTPL

First of all, after purchasing a car, no matter whether it’s new or used, the question arises about obtaining compulsory insurance - compulsory motor liability insurance. The meaning of this insurance is that it is a direct protection of the property interests of the car owner. That is, when taking out a compulsory motor liability insurance policy, the risk that the driver of the car may be guilty of causing damage to other road users is insured.

Before this policy was mandatory, the at-fault drivers, at their own expense, compensated for damages to third parties in the traffic accident. But with the introduction of compulsory motor liability insurance into the responsibility of the driver, the payments of compensation provided for by this policy are also required.

Of course, drivers with “…twenty” years of experience will say that they will never be able to damage, for example, someone else’s car. But when some “teapot” damages the car of an experienced driver, the latter will immediately begin to look for options for compensation for the damage.

That is why, in order not to spend budget funds on “settling” road disputes between road users, the state has introduced mandatory compulsory motor liability insurance. It’s easier to say that a kind of fund was created, accumulated in insurance companies, from which compensation payments are made to the owners of damaged vehicles.

All over the world, auto liability insurance has long been considered a product that is purchased to keep the driver calm on the road. So that the driver knows that if an insured event occurs, he will receive compensation without any problems.