Florida 20-44 Resident Personal Lines Agent License Practice Exam Prep & Study Guide

A franchise deductible is a unique type of deductible in insurance where the insurer agrees to cover the loss in full once the claim meets or exceeds a specified deductible amount. This means that if a loss occurs that is below this set amount, the insurer will not pay anything. However, once the loss reaches or exceeds the deductible threshold, the insured receives the total amount of the eligible loss without further deduction.

This system differs significantly from traditional deductibles, where only a portion of the loss is paid after the deductible is satisfied, and any claim below the deductible amount would not trigger a payment. Consequently, in the context of franchise deductibles, the insured does not pay a portion of the loss; rather, they receive full compensation above the deductible threshold, which aligns perfectly with the choice you chose.