What is a Disappearing Deductible?

As a Massachusetts driver, there are a variety of auto insurance discounts and additional coverage options available to you that can save you money on your premium, on repair costs related to an accident, and more.

But have you heard about the auto insurance coverage option that rewards drivers who have safe driving records with dollar credits over and over and over again? It’s called a Disappearing Deductible.

To determine whether this policy option is a good fit for you, you are going to need all of the details, including what is a disappearing deductible, how it works, and, most important, are you eligible to take advantage of this credit that pays you back.

Understanding Disappearing Deductible Rewards

Unless you are a driver with a zero-deductible auto insurance policy – which is extremely rare – or you are a car owner who has decided not to carry collision or comprehensive coverage on your vehicle, then your auto insurance policy includes a deductible amount.

An auto insurance deductible is typically either $500 or $1,000 and only applies to the collision and comprehensive portions of your policy. In the event of an accident or if your car is vandalized, this deductible amount is what you will have to pay out for repairs to your vehicle before your insurance kicks in.

However, having disappearing deductible rewards on your auto insurance policy can save you from digging into your own funds to pay for vehicle repairs, or at least reduce the amount you have to pay out of pocket.

For example, let’s assume you had a $500 collision deductible at the beginning of your policy term and that your insurer offers $100 disappearing deductible credits each year you continue to have a clean driving record. Thus, upon annual renewal, if you’ve met the safe driving criteria of your insurer, your deductible would drop to $400, while your coverage and your premium would essentially stay the same. Also, this means that if you were to get in an accident, you would now only be accountable for paying for $400 worth of related damages to your vehicle rather than the original $500 deductible amount.

If you have had a clean driving record – meaning no accidents or traffic violations – for over a year, you might be able to take advantage of this program today. Then, you can sit back and watch your deductible amount decrease, year after year, by as much as $100 per year. Some of the insurance companies we work with will even let your deductible vanish all the way down to $0!

5 Things To Know About Disappearing Deductible Rewards

Selecting a disappearing deductible coverage option sure sounds like a simple way to reduce the potential amount you would ever have to pay out of pocket for accident-related car repairs. However, before signing up, it’s important to consider these five key program elements:

The collision deductible is the main focus
A disappearing deductible typically applies only to your collision deductible; however, some insurance companies add other benefits to their Disappearing Deductible forms, such as rental vehicle loss of income coverage, accidental discharge for airbags, bail bonds, and a death benefit.
The amount your deductible will be reduced by every year depends on the insurer’s program
Different insurance companies offer different credits to their insureds. Some reduce your deductible by $50 per year, while others offer $100 credits. In addition, some carriers give you a credit – as much as $150 – just for signing up. By working with your local agent, you can identify those companies who offer the most significant credits.
Some programs have limits to how much your deductible can be reduced
Again, there is variation across insurance companies when it comes to program limits. Some insurers allow you to accumulate up to $500 in credits, while others have no limits. Based on your starting deductible amount, your insurer’s limit may or may not matter to you. For example, if you have a $500 deductible and the limit your insurer applies is $500, you can still work your way down to a zero deductible. However, if you have a higher deductible, this limit might be an issue for you. Your insurance partner can help you think through whether a program limit is a constraint you’d rather not have.
If you get into an accident and choose to cash in on your credits, you will likely lose some, if not all, of them
Disappearing Deductible credits are obviously great to have should you ever get into a car accident that causes damage to your vehicle. In this situation, you can choose to use your accumulated rewards to lower the deductible that you have to pay out of pocket. However, it’s important to know that once you use your disappearing deductible credits, your carrier is likely to take away the amount of rewards that you have used. With the help of your local agent, you can identify those disappearing deductible programs that are the fairest – and most forgiving – towards drivers when they have an accident. In addition, your agent should be able to point you to some companies that combine a Disappearing Deductible option with an Accident Forgiveness benefit. A two-for-one program like this can potentially save you thousands of dollars in insurance premiums and vehicle repairs after a crash.
You might have to pay a little more to have the disappearing deductible option
Once again, each insurance company varies in the amount they charge for this rewards program, but often the cost is very reasonable, about $30-60 per year to add this option to your policy. Typically, this option is a separate endorsement that is added to your policy. Some companies package this option with other broadening coverages, such as airbag discharge, death benefit, cost of bail bonds, and rental vehicle loss of income. Your local insurance team can assist you in finding the program that makes the most sense for you and your budget.

Want To Know More About Disappearing Deductible Rewards?

Whether you have a squeaky-clean driving record or one you’re not quite as proud of – with maybe a moving violation or two over the past few years – it’s worth talking to a local and experienced independent agent, like Gilbert Insurance, to understand if the disappearing deductible option is available to you. In addition, the Gilbert team will be able to provide you with advice on whether this rewards program would be a good deal for you based on both your driving record and the amount of money you could potentially save on your deductible.

Since 1951, we have been advising drivers of all ages and experience levels North of Boston on not only the best auto insurance options for their needs but also on how to make Massachusetts auto insurance affordable for all licensed drivers in the household. To ensure we identify all the discounts and additional coverage options you are eligible for, including disappearing deductible credits, we will spend time getting to know you and your family, your vehicles, and your driving behaviors.

Call us at (781) 942-2225 or contact Gilbert Insurance today to learn more about this and other auto insurance coverage options such as accident forgiveness, loan/lease gap, bundle and save, and rental car reimbursement insurance. Plus, find out what discounts you might be missing out on.