Vanishing Deductible: Do You Have It, and Do You Need It?
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? 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.
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 California Texas Colorado New York Washington 15 30 45 60 75 90 105 120 135 150 165 180 195 210 225 240 $223 $187 $97 $247 $76
Liberty Mutual is another company which 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:
- A clean driving record is not a prerequisite
- It applies to every vehicle on your plan
- 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 California Texas Colorado New York Washington 15 30 45 60 75 90 105 120 135 150 165 180 195 210 225 240 255 270 285 $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 California Texas Colorado New York Washington 15 30 45 60 75 90 105 120 135 150 165 180 195 $197 $148 $84 $193 $101
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 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 California Texas Colorado New York Washington 15 30 45 60 75 90 105 120 135 150 165 180 195 210 225 240 255 270 285 $278 $182 $121 $299 $134
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 California Texas Colorado New York Washington 15 30 45 60 75 90 105 120 135 150 165 180 195 210 225 240 255 $255 $177 $99 $234 $86
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 and 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 3 – 5 free and accurate auto insurance quotes right now. Just enter your zip code into the quote widget on this page.