Vanishing Deductible: What to Know

A vanishing deductible can put money back into your pocket for being a safe driver.

Courtney Washington
Courtney Washington

Courtney Washington is a Texas A&M University graduate. Her extensive knowledge and background in auto, home, and umbrella policies make her a one-stop shop for insurance advice and information. She loves to help her readers understand their insurance choices so they can make informed decisions about their coverage.

Danny Smith
Edited byDanny Smith
Photo of an Insurify author
Danny Smith
  • Licensed auto and home insurance agent

  • 4+ years in content creation and marketing

As Insurify’s home and pet insurance editor, Danny also specializes in auto insurance. His goal is to help consumers navigate the complex world of insurance buying.

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Updated July 18, 2024

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A car accident can be costly, especially for drivers with high deductibles or who file claims frequently. However, several companies offer a vanishing deductible option to reward drivers for avoiding accidents.

A vanishing deductible, also known as a diminishing or disappearing deductible, is an optional feature some insurers offer. Every year without filing a claim equals immediate credit toward your comprehensive or collision insurance deductible. If you’re safe on the road long enough, you could pay $0 toward your claim when you need to file one.[1]

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Rates shown are real-time Insurify user quotes from 100+ insurance companies and Quadrant Information Services data. Insurify’s algorithm excludes anomalous quotes and anonymizes personal details, then displays refined quotes by price, date, and insurer popularity up to 10 days ago from July 18, 2024. Actual quotes may vary based on the policy buyer’s unique driver profile.

How does a vanishing deductible work?

A vanishing deductible decreases a driver’s out-of-pocket expenses by a set amount every policy term they go without filing a claim. Companies typically reduce your deductible by $50 every six months or $100 annually. Some insurers impose a maximum amount of $500 or $1,000, while others don’t have a limit on their vanishing amount.

You may pick a higher deductible so that you’ll pay a lower monthly premium for your coverage. But this means that if you were in an accident, you’d have to pay that high deductible out of pocket before the insurance company covered the rest of the damages.[2]

With a vanishing deductible, you can choose a higher deductible to benefit from a lower premium. And you also get to pay less out of pocket when filing a claim if you’ve been violation-free for a certain amount of time.

Good to Know

Some insurance companies offer vanishing deductibles as an add-on to an auto insurance policy, while others include vanishing deductibles as part of a package. Either way, policyholders pay an additional fee to include the vanishing deductible option on their auto policy.

Car companies that offer a vanishing deductible

Allstate

Allstate calls its program Deductible Rewards. When you sign up for the program, Allstate automatically takes $100 off your deductible and an additional $100 off per year that you’re accident-free. The company only offers vanishing deductibles to drivers that opt into its Gold or Platinum Your Choice auto package, which can be more expensive than other options.

Liberty Mutual

Liberty Mutual provides a vanishing deductible called a Deductible Fund for collision coverage only. The company offers year-long policies and decreases your collision deductible every year you avoid filing a claim. Liberty Mutual provides the option for a Deductible Fund to all drivers regardless of their driving history.

Nationwide

Nationwide offers a vanishing deductible for both collision and comprehensive coverage. The company lowers the deductible by $100 each year you’re accident-free, with a maximum savings of $500. After an accident, Nationwide automatically gives you a credit of $100 instead of making you start at $0 of credit for the first year.

Progressive

Progressive also offers a vanishing deductible, called the Deductible Savings Bank, for comprehensive and collision deductibles. For every policy period you remain accident-free, Progressive will reduce your deductible by $50. Because Progressive’s policy periods last six months, you could see a decrease of $100 per year for either your comprehensive or collision deductible.

Travelers

Travelers offers a Premiere Responsible Driver Plan, which includes a vanishing deductible option and other accident-forgiveness perks. The company reduces your deductible by $100 for every year you remain accident-free, with a $500 maximum.

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Benefits of vanishing deductibles

These are some benefits of vanishing deductibles:

  • They keep rates low. Drivers opt for higher deductibles because the higher your deductible, the lower your monthly insurance premium. With a vanishing deductible, you can have a lower monthly premium and a low or $0 deductible in the event of an accident.

  • They don’t cost much. Vanishing deductible coverage is usually affordable and can be a valuable add-on when paired with other benefits, like accident forgiveness.

  • You’ll pay a lower deductible. A lower deductible means you’ll keep more money in your pocket if you need to file a claim.

Drawbacks of vanishing deductibles

Vanishing deductibles also have some drawbacks you may want to consider:

  • They aren’t the best option for drivers who drive infrequently or don’t file any claims. Drivers with this coverage can ultimately pay more than their deductible if they remain claim-free with this coverage for too long.

  • Your lower deductible only applies as long as the coverage is in effect. When you remove the vanishing deductible coverage, you lose all the deductible credit you’ve built up since the coverage started. Your deductible will revert to the full amount you selected at the start of the policy, and the full deductible is due if you get into an accident.

  • Your deductible resets after each accident. After each accident, your deductible returns to where it started. You’ll then have to remain accident-free to decrease your deductible again.

Is a vanishing deductible worth it?

Whether a vanishing deductible is right for you depends on how often you file claims for an accident. Accident-prone drivers benefit more from this coverage because they benefit from a low deductible and a cheap monthly premium.

Safe drivers or drivers who spend less time on the road might get less value from this coverage. While your monthly premium and deductible may be low, you’ll be paying for coverage you may never use.

Safe drivers also risk paying more than their deductible without receiving the benefit of any vehicle repairs. Because companies bill for this coverage at the beginning of each policy term, safe drivers could end up paying out their total deductible amount by hanging on to this coverage year over year without filing a claim.

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Vanishing deductible FAQs

Drivers can get a vanishing deductible option from insurance companies and car dealerships. Read below for answers to more frequently answered questions.

  • What does a $100 disappearing deductible mean?

    A $100 disappearing deductible means the policyholder can expect their deductible to decrease by $100 each policy term if they remain accident-free.

  • How does a disappearing deductible work on a car warranty?

    The differences between disappearing deductibles from an insurance company and a dealership’s disappearing deductible depend on the company. With Toyota, for example, the dealership offers a $0 deductible or a $100 vanishing deductible with extended warranties. Drivers that opt into the disappearing deductible would pay $0 to file a claim and get repairs at the dealership that sold them the warranty or $100 to have their vehicle fixed elsewhere.[3]

  • How can you qualify for a diminishing deductible program with your insurer?

    Eligibility requirements for diminishing deductible programs vary from insurer to insurer. Some insurance companies require a clean driving record, while others only need the driver to get an auto policy and opt into the coverage. Generally speaking, as long as you pay for the coverage each term, you’ll enjoy the benefits of the vanishing deductible.

  • How does a vanishing deductible program affect your insurance premiums?

    It depends on the insurance company. Some companies offer a vanishing deductible program as an add-on to auto policies, while others offer it as part of a package with other quality coverage options, like a total loss deductible waiver. It’ll typically increase your premiums slightly, but that extra cost can be worth it if you end up needing to file a claim.

Sources

  1. International Risk Management Institute. "Disappearing Deductible."
  2. Insurance Information Institute. "Understanding your insurance deductibles."
  3. Toyota. "Deductible Options."
Courtney Washington
Courtney Washington

Courtney Washington is a Texas A&M University graduate. Her extensive knowledge and background in auto, home, and umbrella policies make her a one-stop shop for insurance advice and information. She loves to help her readers understand their insurance choices so they can make informed decisions about their coverage.

Danny Smith
Edited byDanny Smith
Photo of an Insurify author
Danny Smith
  • Licensed auto and home insurance agent

  • 4+ years in content creation and marketing

As Insurify’s home and pet insurance editor, Danny also specializes in auto insurance. His goal is to help consumers navigate the complex world of insurance buying.

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