Will a Disappearing Deductible Help You Save on Car Insurance?
Are the Savings Worth the Costs?
The concept of a "disappearing deductible" sounds like a great way to save on the cost of car insurance.
Learn whether a disappearing deductible is as good of a deal as it sounds and when it might be right for you.
What Is a Disappearing Deductible?
A disappearing deductible is a way that insurance companies reward their customers for accident-free driving. Basically, the longer you go without a claim, the lower your insurance deductible becomes. Depending on your policy, your deductible may disappear altogether.
Who Offers Disappearing Deductibles?
A few insurance companies offer the disappearing deductible incentive, including Nationwide, The Hartford, Allstate, and Liberty Mutual. Learn more about how the disappearing deductibles work at each of these companies.
Nationwide Vanishing Deductible Program
For every year of accident-free driving, your deductible will be decreased by $100. The program can be used to decrease your deductible for up to $500. This could leave you with no deductible at all, helping you manage your insurance and repair costs and save money.
The vanishing deductible is an optional feature with Nationwide Insurance. The details and availability can vary from state to state. If you are in an accident after building up credits, you don’t have to worry about your credits all being taken away.
For example, if you have had a safe driving record for three years and then have an accident, your deductible credit would be reduced to $100 instead of $300.
The Hartford Disappearing Deductible Program
With The Hartford’s Program, for every year you are accident-free, your premium goes down by $50.
Your deductible will continue to decrease by $50 every year you are accident-free. Eventually, you could have no deductible at all. With The Hartford’s plan, you must also not have any moving violations on your driving record within the last three years to qualify.
Allstate Deductible Rewards
The Allstate deductible rewards program is a little different from the other disappearing deductible programs. As soon as you sign up, you are immediately given $100 off your collision deductible.
For every year you are accident-free, another $100 is deducted from your deductible. You can accumulate up to $500 off your auto insurance deductible.
However, with Allstate’s program, if you do have an accident, the deductible reverts back to the original deductible amount. The deductible rewards discount is only available through the gold and platinum policy packages.
Liberty Mutual Deductible Fund
Liberty Mutual's program is called the Liberty Mutual Deductible Fund. It is not actually a disappearing deductible; rather, it allows you to save money toward your deductible. Liberty Mutual will also contribute to your deductible fund.
Here's how it works. When you enroll, you contribute $30 toward your deductible for the first year and Liberty Mutual contributes $70 giving you a total of $100 toward your deductible.
For each year, the deductible savings goes up by $100 even though you contribute the same $30 each year. For year two, the savings is $200, for year three, the savings is $300, etc. The deductible fund never expires as long as you remain a Liberty Mutual customer.
What Is the Catch?
The disappearing deductible advantage is only offered to customers at an additional premium cost. The cost of taking advantage of this incentive offered to policyholders with safe driving records varies from company to company.
When it comes to costs, the disappearing deductible works in a similar way to the accident forgiveness incentive offered by many insurance companies.
Is the disappearing deductible a good deal? It depends on your driving record. Of course, if you have a less-than-perfect driving record, you should not waste any money on a plan that will not result in insurance savings for you.
However, it is possible to save money on a deductible if you have a perfect driving record. You will have to do the math to figure out if the amount of money you save on your deductible is worth the cost of the program.
But it's important to remember that accidents could happen to anyone at any time, regardless of your driving record. In programs where the deductible reverts back to the original, it could undo a lot of hard work in a very short time.
After five years of building to a $0 deductible, one accident could cause your deductible to go up to $500 again. That may not be the best deal for you.
Ask your own insurance provider if it offers a disappearing deductible program, and get all the details to find out if it is a good deal for you.