Vanishing Deductibles

You've probably seen more than a few vanishing deductible commercials over the years. It sounds like the longer you go without an accident, the more your deductible goes down. Eventually, you'll have no deductible at all! While a diminishing deductible — or even a disappearing deductible! — sounds like a great deal, it just might be too good to be true. In many cases, vanishing deductibles are not simply included in your auto insurance coverage. There is always some kind of fee associated with this option, whether a flat rate or a disappearing deductible formula based on the cost of your coverage. In order for your collision car insurance deductible to drop, you also have to have a clean driving record. If your record is clean and you aren't making any claims, you won't need to pay any deductible anyway. Find out what you should think about before you decide whether vanishing deductible auto insurance coverage is right for you by reading on.

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Chris Tepedino is a feature writer that has written extensively about auto insurance for numerous websites. He has a college degree in communication from the University of Tennessee and has experience reporting, researching investigative pieces, and crafting detailed, data-driven features. His works have been featured on CB Blog Nation, Flow Words, Healing Law, WIBW Kansas, and ...

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Rachael Brennan has been working in the insurance industry since 2006 when she began working as a licensed insurance representative for 21st Century Insurance, during which time she earned her Property and Casualty license in all 50 states. After several years she expanded her insurance expertise, earning her license in Health and AD&D insurance as well. She has worked for small health in...

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Reviewed by Rachael Brennan
Licensed Insurance Agent

UPDATED: Nov 17, 2020

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Vanishing deductibles sound great. After all, who wouldn’t want to avoid paying some (or all) of their deductible in the event of an accident?

It sounds like a convenient way to save money — but is there more to vanishing deductibles than meets the eye? Could asking for a vanishing deductible, or purchasing optional vanishing deductible coverage, cost you more money in the long run?

You can find a general explanation of deductibles here. If you’re unfamiliar with exactly how vanishing deductibles work, then you’ve come to the right place. We’ll teach you everything you need to know right here on this page.

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Who Offers Vanishing Deductibles?

For the most part, vanishing deductibles are a luxury available among major national auto insurance providers. However, if there is a well-established local provider in your area, you may have a shot at getting vanishing deductible rewards from them, also.

It’s important to note that not all insurance companies manage their vanishing deductible program the same way.

Some companies apply different amounts to your grand total; other providers have different safe driving requirements in order for you to qualify, and still, others offer different purchase requirements.


Unlike some companies, you can get a faster jump start on lowering your deductible with Allstate. However, it’s technically known as Deductible Awards, and you have to buy a higher-tier auto policy in order to have access to it.

But once you purchase such a policy, the first hundred dollars of deductible reduction will be immediately applied to your account. You will then collect another $100 for each year after up to a limit of $500.

Of course, this requires you to make a minimum four-year commitment to Allstate, to maintain a clean driving record for at least that same amount of time, and to pay higher premiums for insurance coverage that you may not actually need.

Average Monthly Premiums (With Vanishing Deductible)Legend: Allstate CaliforniaTexasColoradoNew YorkWashington 153045607590105120135150165180195210225240$223$187$97$247$76

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Liberty Mutual

Liberty Mutual is another company that takes off $100 from your collision deductible as soon as you sign up – for an annual fee of around $50 (or less if you’re lucky). For the cost, you can get a few different perks:

  1. A clean driving record is not a prerequisite
  2. It applies to every vehicle on your plan
  3. If you do get into an accident, your reduced deductible will still apply for the duration of your current policy

Of course, Liberty Mutual tends to be on the more expensive side when it comes to monthly premiums, so the annual $50 cost of the Deductible Fund program is pretty cheap in relation to your total premium costs.

But if you own an older vehicle, if you’re not in training multiple vehicles, or if Liberty Mutual is simply out of your price range, then the costs may not outweigh the benefits.

Average Monthly Premiums (With Vanishing Deductible)Legend: Liberty Mutual CaliforniaTexasColoradoNew YorkWashington 153045607590105120135150165180195210225240255270285$245$199$113$286$93


Nationwide gives you a few different advantages when it comes to their vanishing deductible program. For starters, it’s one of the only programs where the discount applies to both your collision and your comprehensive deductibles; most companies only apply the discount to your collision coverage.

But like many others, it gives you a $100 reward every year until you reach the $500 maximum at the 5-year mark.

But the squeaky clean driving record required of most companies is not required by Nationwide and doesn’t automatically go back to zero if you have an accident (but it does reduce substantially).

Regardless of how much you pay in monthly premiums, it will cost you $60 a year to start and an extra $10 for each other vehicle on your policy.

Average Monthly Premiums (With Vanishing Deductible)Legend: Nationwide CaliforniaTexasColoradoNew YorkWashington 153045607590105120135150165180195$197$148$84$193$101

The Hartford

The Hartford is a little stingier than the rest. Their yearly price reduction is only $50, and it does require at least 3 years of a clean driving record to even qualify.

However, there is no maximum limit to how much of your deductible will vanish. But, like most other companies, it is only applied to your collision coverage. Unlike many companies, there is no flat rate for adding this coverage to your policy.

It is determined by calculating a small percentage of your monthly premiums; obviously, if your premiums are on the more expensive side, this small percentage can become pretty substantial in the long run.

Average Monthly Premiums (With Vanishing Deductible)Legend: The Hartford CaliforniaTexasColoradoNew YorkWashington 153045607590105120135150165180195210225240255270285$278$182$121$299$134

Allied Insurance

While many insurance companies offer you $100 deduction off your Collision deductible just for signing up for a Vanishing deductible program, Allied chooses to arrive fashionably late to that party.

You have to wait until after the first 30 days of your policy have passed, and you are not allowed to file a claim during this time if you want to keep this coverage.

From then on, it’s another $100 for every year that you maintain a clean driving record, with a maximum of $500.

Average Monthly Premiums (With Vanishing Deductible)Legend: Allied CaliforniaTexasColoradoNew YorkWashington 153045607590105120135150165180195210225240255$255$177$99$234$86

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The Anatomy Of A Vanishing Deductible

For those who aren’t completely clear on the definition of the vanishing deductible, it’s typically known as a reduction in the dollar amount of your collision coverage deductible you will be required to pay in the event that you need to file a claim.

The main requirements are that you stay accident-free for a certain number of years, and maintain an auto policy with the same company for that time frame.

Some companies may even require you to remain violation-free (no speeding tickets, running red lights, etc) during the same time frame.

The idea of a vanishing deductible can offer some financial benefits for drivers who want to hedge their bets. You yourself may be a safe motorist, and completely capable of driving without incident for many years, but that doesn’t mean you won’t be in the wrong place at the wrong time when another driver hits your vehicle.

In the event that you suddenly need to file a collision claim, your financial burden could be reduced by up to $500 or more — essentially giving you an opportunity to file a collision claim for free.

But if this benefit worth the cost? After all, most companies do require you to pay for vanishing deductible coverage. Some charge you a flat fee regardless of the car you drive or your personal circumstances; others will up your monthly premium by a certain fixed percentage.

Over the course of a few years, you can easily fall into a situation where the money you would hypothetically save if you had to file a claim right now is less than the money you have paid out “earning” your vanishing deductible.

And, of course, if you never have to file a collision claim with that particular insurance provider, you’re essentially leaving money on the table.

Comparing the costs and benefits of vanishing deductible coverage is one thing. But comparing rates between insurance providers in your area is another process entirely.

If you think navigating the ins-and-outs of vanishing deductible coverage is tough, comparing entire policies from one company to another is an entirely different beast. And that’s why we’re here to help.

We can do all of the hard work for you and get you at least three free and accurate auto insurance quotes right now. Just enter your ZIP code into our FREE quote tool now.

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