A "with average" policy contains a ________ that provides for payment only if the loss exceeds a specified minimum amount.

Question

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A franchise clause in an insurance policy specifies a minimum amount of loss that must be exceeded before the insurer becomes liable to pay the claim. This requirement is included to limit the insurer's exposure to small and insignificant losses. Therefore, a "with average" policy containing a franchise clause would only provide for payment if the loss amount exceeded this specified minimum amount. Therefore, option B, which refers to the franchise clause, is the correct choice.

A "With Average" Policy Contains a ________ That Provides for Payment