Disappearing Deductible Auto Insurance Explained

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Here's what you need to know...
  • Some insurance companies offer a deductible reduction plan to those going without accidents or violations for a certain time period
  • These plans often cost more than regular plans
  •  You will have to evaluate your specific situation to see if a vanishing deductible program would benefit you


If you’re in the market for new car insurance, you’ve probably heard something about vanishing or disappearing deductible car insurance.

Because car insurance companies insure driver risk, they’re interested in offering coverage to the safest drivers. Submitting a claim sometimes exceeds the car insurance rates for annual coverage.

Insurance companies lose money when they pay claims. That’s why a good driving record is especially attractive to an insurance company.

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What insurance companies offer vanishing deductible?

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At least two large car insurance providers —The Hartford and Nationwide — offer vanishing or disappearing deductible car insurance. Both policies offer similar benefits to insured policyholders.

If you’re hoping to obtain disappearing car insurance from The Hartford, plan to submit an accident-free driving record of at least three years.

Your deductible is automatically reduced by $50 for the initial three-year period. The Hartford reduces your deductible another $50 for each year you drive without the following:

Nationwide’s vanishing insurance commercial shows a boulder turned into a small pebble. The image helps car insurance buyers think that a burden, such as car insurance rates, can be minimized with the vanishing insurance strategy.

For each year the insured doesn’t have an accident, the insurance company reduces the deductible by a certain amount. After several years, the policyholder may qualify for zero deductible car insurance without an increase in car insurance rates.

According to the Nationwide website, the company takes $100 off upon enrollment in the disappearing deductible program.

If the insured avoids a moving violation or car accident (and subsequent car insurance claim) for the contract year, Nationwide decreases the deductible by $100. The deductible is part of the co-payment the insured agrees to make in the event of a car insurance claim.

Why do insurance companies offer vanishing deductible car insurance?

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Good drivers interested in vanishing deductible car insurance hope to reduce their deductible to zero over time.

In the event of a car insurance claim, the policyholder with a zero deductible makes no co-payment.

According to calls made to both The Hartford and Nationwide, vanishing deductible car insurance does cost more than traditional car insurance.

The Hartford offers the disappearing deductible car insurance products to its “Advantage Plus” policyholders. The cost of Advantage Plus is approximately five percent more than traditional car insurance from the company.

Nationwide offers vanishing deductible insurance for approximately $60 per year to car insurance policyholders (for a single vehicle). Additional vehicles may be added to the policy for $10 each.

If you’re involved in a car accident as a disappearing deductible policyholder, your deductible rate returns to the original level.

Then, to become reinstated in the disappearing deductible program, the insured must remain accident- and violation-free for three years. Unfortunately, The Hartford doesn’t distinguish between an at-fault and a non at-fault accident claim.

Policyholders of Nationwide return to the $100 reduction in deductible when they make a car insurance claim.

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Do all disappearing deductible plans work the same way?

No. The disappearing deductible plans vary from car insurance provider to car insurance provider.

The main way these plans differ is by the amount of money the car insurance provider removes from the deductible amount each year.

As previously stated, Nationwide Insurance removes $100 every year, with a total discount limit of $500. Another nation-leading car insurance provider, The Hartford, offers a much different approach.

With The Hartford, the amount removed each year the policyholder goes without an accident is only $50.

While the annual discount amount is half that of Nationwide Insurance, The Hartford does not place a limit on the ultimate amount by which the deductible can be reduced.

So with The Hartford, the policyholder earns less of a discount each year but ultimately can end up with no car insurance deductible at all.

Is there a drawback to signing up for a disappearing deductible car insurance plan?

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The only real drawback to opting into a disappearing deductible plan is that it costs more than an average car insurance plan.

These disappearing deductible plans are usually only available with a higher priced car insurance package or an added flat rate.

The Hartford, for example, only offers its disappearing deductible plan with its Advantage Plus car insurance package. This is The Hartford’s more expensive car insurance package.

This car insurance package adds between five percent and six percent to the policyholder’s car insurance cost.

Nationwide Insurance works a bit differently than The Hartford when it comes to the cost of its vanishing deductible plan.

Instead of packaging its plan with a higher priced car insurance package, Nationwide offers its program to all of its policyholders at a flat rate of $60 annually.

If the policyholder has multiple vehicles insured with Nationwide, they can add the additional cars for $10 each annually.

Is the cost of a disappearing deductible car insurance plan worth it?

The cost of these disappearing deductible plans does add up over time.

With the Nationwide Insurance plan, after five years of no accident claims the policyholder’s deductible is reduced by $500, but that policyholder has ended up paying $300 or more depending on their number of cars enrolled in the program.

With The Hartford, the percentage increase can add up to an extra $80 on the policyholder’s car insurance premium each year.

Even though with The Hartford plan the policyholder can eventually have no deductible at all, that extra amount on their premium adds up each year.

Do the economics of vanishing deductible car insurance make good financial sense?

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Let’s say you’re a careful driver and you don’t submit a car insurance claim for five years.

If you’ve paid in $300, or $60 each year for five years, for vanishing deductible car insurance, you’ve earned the right to zero deductible car insurance. You’ve paid $300 to save $500.

If you haven’t submitted a car insurance claim, you’ve simply paid higher than necessary car insurance rates.

The average car insurance policyholder pays about $1,400 plus a year for car insurance.

Paying an incremental premium for an unused car insurance deductible benefit may not make good financial sense to you.

If you’re an accident-free driver, saving money on your car insurance rates is possible. Your clean driving record, paired with other attractive financial fundamentals like good credit, can save you money on car insurance.

Comparing car insurance rates by requesting car insurance quotes at least once per year is one of the best ways to save money on car insurance.

Alternatively, raising your deductible rate could make sound financial sense. If you’re driving an older vehicle and have a solid driving record for at least five years, raising your deductible can save you approximately 15 percent on car insurance rates.

In other cases, paying higher car insurance rates can be a good move. If your cash flow isn’t reliable, paying a higher out-of-pocket deductible in the event of a car insurance claim can add financial stress.

The best way to determine whether or not vanishing deductible car insurance works for you is to discuss the idea with your financial advisor.

Make sure to explore all of your options by requesting FREE car insurance quotes. Just type your ZIP code into the below box!

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