What is a Vanishing Deductible?

Are you a safe driver? If so, it might interest you to learn about something called a “vanishing deductible.” If you don’t know what a vanishing deducible is, or whether you qualify for one, read on find out how this insurance feature can save you money.

What is a vanishing deductible?

Car insurance companies favor customers who are safe drivers. Safe drivers have fewer accidents, file fewer claims and ultimately make the insurance company money rather than costing it money. For this reason, some car insurance companies try to encourage safe driving through incentives and programs. One such incentive is a feature called the vanishing deductible. Terms and conditions will vary by provider and driver, but the basic idea is simple: Your deductible decreases for every year you don’t file an insurance claim. The typical vanishing deductible discount is $100 per 12 months of safe driving. If you’re wondering how this saves you money, here’s a short guide explaining how car insurance costs work. 

Deductible – This is the amount you pay out-of-pocket before the insurance company contributes money toward a claim. For example, if you have a $1,000 deductible, and are involved in an incident that results in $5,000 in damage, you will pay $1,000 out of pocket and your insurance company will pay the remaining $4,000. 

Premium – This is your monthly payment. Your premium will depend on a number of factors including the age, make, model and value of your vehicle and your driving record.

If your insurance provider’s vanishing deductible program subtracts $100 every year you don’t file an insurance claim, then your potential out-of-pocket expense would go from $1,000 to $900 to $800 and so on for every additional year of safe driving.

Do you qualify for a vanishing deductible?

To find out whether your insurance company offers a vanishing deductible, call your insurance agent and ask about your policy. Since a vanishing deductible incentive is usually available only to motorists with a clean driving record, you may not be eligible right away if you’ve recently been involved in a traffic accident. While inquiring about a vanishing deductible, make sure to ask about other discounts that could lower your car insurance rates. Remember, a vanishing deductible program doesn’t save you money until you get into an accident, so always ask about other ways to save on car insurance coverage.

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