Meaning of franchise clause

fran'chise clause"

Pronunciation: [key]
— (esp. in marine-insurance policy)
  1. a clause stipulating that the insured will be responsible for any loss not in excess of a stated amount, and the insurance company will be liable for full payment of the loss equaling or exceeding the amount up to the insured amount. Cf. deductible clause.
Random House Unabridged Dictionary, Copyright © 1997, by Random House, Inc., on Infoplease.