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Difference Between Franchise Deductible and Ordinary Deductible

Franchise Deductible and Ordinary Deductible

Difference Between Franchise Deductible and Ordinary Deductible

If you are about to start your car wash franchise business, you should know the difference between a franchise deductible and ordinary deductible. A lot of people confuse these two. Read on and have a better glimpse of the difference between these two franchise terms.

First, we need to define what a deductible is. According to a content, continuing education and certification site for insurance professionals, deductible is the amount that an insurer will deduct from the loss before paying up to policy limits. In simpler terms, when you insure your car wash business, the basic premise is that the deductible is the amount that will be subtracted from the total damage that occurs. The responsibility of the insurance company is to cover the remaining balance. Deductibles allow companies to share in losses and to encourage insurance clients and business owners to avoid unnecessary losses. In a way, deductibles can keep insurance costs affordable.

Franchise Deductible vs Ordinary Deductible

All defines franchise deductible as a stipulation that no claim will be paid until a loss exceeds a flat dollar amount. Sometimes it can also be a percentage of the amount of insurance. Thus, the insurance policy covers the damage over the amount set.  An insurer will not be liable for the damage that is below the limit. But once the damage exceeds the limit, the insurance company has to pay the loss in full. An ordinary or standard deductible is different on the other hand.

According to, in a standard deductible, the policyholder must pay an amount set by their contract before the insurer will contribute to claims of any amount. The personal blog of Thomas Chen  explains the difference very clearly:  If the loss is greater than franchise deductible, the payment that the insurer has to make should be in full. While nothing is paid if the loss minus the ordinary deductible is less than the ordinary deductible.

How Are Deductibles Determined?

How are deductibles determined

How are deductibles determined
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There are various ways that a franchise deductible amount is determined. One way is that the parties agree on a specific cash amount. They can base it on the industry, business risks, and the current situation of the business market. They should clearly stipulate it in the franchise and insurance policy. Some business owners, on the other hand, use the percentage method. The insurance company can negotiate this with the business owner. Of course, the risks, the policies and the various other factors affecting the business and the business situation in general.


Before entering a car wash business or any business for that matter, one has to understand insurance policies like how to get car wash insurance. Franchise deductible and ordinary deductible may be too easy to grasp for some. However, for some people, the terms sound similar and so this can be very confusing. If you do not want to confuse these franchise terms and jargon, consider a franchise partner that will help you even in the most minute details like insurance policies and franchise deductibles. Consider a franchise opportunity with DetailXperts. We offer a stable business and unending support from startup even up to your business expansions.

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