What can an insurer of frozen food apply to exclude a loss arising from a short failure of the electricity supply lasting 30 minutes or less?

In the context of insurance and particularly regarding coverage exclusions for specific types of losses, a franchise can be applied to exclude a loss due to short failures in electricity supply. A franchise operates similarly to a deductible but functions differently in its application.

When a franchise is included in a policy, it typically sets a threshold for loss recognition. If a loss falls below a predetermined amount, such as the impact from a brief power failure of 30 minutes or less, the insurer may not be liable to pay for that loss. Thus, the franchise effectively excludes minimal or trivial claims, allowing insurers to manage operational costs and focus on more significant claims where insured loss would be impactful.

This mechanism is particularly relevant in the context of insuring frozen foods, where short disruptions may not result in sufficient loss to warrant a claim, hence allowing both the insurer and the insured to avoid unnecessary administration related to minor claims.

On the other hand, aggregate, deductible, and excess mechanisms serve different functions and do not specifically address the exclusion of losses under the outlined scenario in the same nuanced manner as a franchise does.