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ISBP 177 States:
If a credit requires the insurance cover to be irrespective of percentage, the insurance document must not contain a clause stating that the insurance cover is subject to a franchise or an excess deductible.

While UCP600 Art. 28.i.
An insurance document may indicate that the cover is subject to a franchise or excess (deductible).

Questions:

1. If the Credit calls for an insurance document covering USD 1,000 and was silent about franchise or excess deductible cases, an insurance policy presented stating the clause "claims would be subject to %1.5 excess deductible" would this insurance be acceptable by banks ? according to which article you have built your answer ?

2. If we have a claim (Loss) of USD 1,000 under 2 insurance documents; one subject to 5% excess deductible and the other is subject to 5% Franchise, how much does the insurance company would actually pay under both cases. ? In other words, what is the difference between the excess deductible, and the Franchise ?

Your urgent professional opinions would be highly appreciated.

Excess, Deductible, and Franchise

In an insurance policy, the deductible (North American term) or excess (UK term) is the portion of any claim that is not covered by the insurance provider. It is the amount of expenses that must be paid out of pocket before an insurer will cover any expenses. [1] It is normally quoted as a fixed quantity and is a part of most policies covering losses to the policy holder. The deductible must be paid by the insured, before the benefits of the policy can apply. Typically, a general rule is: the higher the deductible, the lower the premium, and vice versa.

A franchise is a deductible below which nothing is payable and beyond which the entire amount of the sum insured is payable. It is typically used in reinsurance arbitrage arrangements. Franchise thus representing a threshold which needs to be exceeded in order for the insurer to be liable for the entirety of the claim.
Source; Wikipedia...
Coming to your queries (i) UCP will prevail and will be accetable document.
(ii) claim must be in excess of 5%.
reagrds kalra n k

Thanks Klara, now things are pretty much clear to me than before.