Vanishing Deductibles: What Is it and Should You Get It?

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Selecting the terms of your car insurance policy is a balance. You can either set a high deductible and low premium, hoping you don’t get into an accident, or be risk averse and choose a low deductible with a higher premium. Some companies try to make the decision easier by offering a vanishing or disappearing deductible program. For each year you don't make a claim, your insurer will reduce your deductible.

This can be a good option if you think getting into an accident is likely. If not, they can be unnecessarily costly.

How do vanishing deductibles work?

For a cost, companies will reduce your deductible a certain amount every year you are accident free, called a vanishing deductible program.

The crux of the program is that your collision deductible will become less expensive after every year of clean driving.

Notice we say "collision" and not "comprehensive". In three of the four programs we explored, only the collision deductible was reduced. So if you have a $500 collision deductible with a $200-per-year premium, the next year it could be a $400 deductible with the same $200-per-year premium. Essentially, when you opt for this type of program, you are hoping to benefit from the best of both worlds — a low deductible and a lower premium.

The amount your deductible actually lessens depends on the company, however. For some, it’s $50, others $100. A common characteristic of each program is, once you get into an accident, sometimes regardless of fault, the deductible goes back up to the starting amount. Some companies also impose limits, like only reducing your deductible by $500 total.

Which car insurance companies offer a vanishing deductible?

As opposed to accident forgiveness, which most companies offer, only a handful of companies have a vanishing deductible program. The four largest companies to offer it are Allstate, Liberty Mutual, Nationwide and The Hartford.


Yearly price reduction
Clean driving requirement
Type of deductible


$100NoUp to $500Collision

Liberty Mutual



$100NoUp to $500Comprehensive and collision

The Hartford


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Called Deductible Rewards, Allstate’s program will take $100 off your deductible when you sign up and another $100 for each year of clean driving, up to $500 total. There is a catch: You need to purchase a Gold or Platinum Your Choice auto package. They’re Allstate's pricier package options, but they also come with accident forgiveness.

Liberty Mutual

The Liberty Mutual Deductible Fund takes $100 off your collision deductible every year you're accident free. They do this by essentially creating a savings account. Every year, you contribute $30 from your premium to the Deductible Fund and Liberty Mutual contributes $70.

Let's say you've contributed to the fund for two years, and then you're in an accident. Instead of paying $500 out of pocket before insurance covers the damages, you'll pay $300, because you’ll have $200 in your Deductible Fund. The year after the accident, your deductible goes back to $500, and you’ll start contributing again.

Two perks of Liberty Mutual's program are that you do not need a clean driving record prior to starting, and it covers all of the vehicles on your plan — other programs usually charge extra for more vehicles. It will also bring your deductible down to zero in the vast majority of states, with the exception of New York, where the minimum is $100. Additionally, even if you get into an accident, your deductible will stay at its current level for the rest of the policy year.


Nationwide’s program takes off $100 every year, up to $500, with the key difference being that the reduction can apply to both your comprehensive and collision deductibles. After a 30-day waiting period, the first $100 credit will be applied to your policy.

You do not need a clean driving record, and if you do get into an accident, your reward goes back to $100 rather than zero. The cost of the program is $60 per year and $10 for every additional car.

The Hartford

When you buy an Advantage Plus Package, you get The Hartford’s Disappearing Deductible. Unlike with other companies, in order to qualify, all drivers on the policy are required to have three consecutive years accident free while insured by The Hartford. Your collision deductible is reduced by $50 for every clean driving year thereafter. In some states, you can even get the deductible down to $0. An exact price for Advantage Plus is difficult to obtain, but it will likely be around 5–10% more expensive than their normal package. Disappearing Deductible can't be added to a California insurance policy.

Is a vanishing deductible worth it?

You will have to do some math to figure out if a vanishing deductible option will be financially beneficial. The pricing of some of these programs is difficult to determine, but imagine a company that charges $60 per year for a vanishing deductible, with a $100 reduction each year.

At $60 a year, you would spend $300 over five years to have it active on your policy.

Let's assume your original deductible was $500, and you made a claim in the fifth year. You would avoid paying that $500, saving you $200 overall.

On the other hand, if you continue with the program for five years and don't get into an accident, you will have spent an extra $300 in those five years.

Whether a vanishing deductible program is valuable is highly dependent on the likelihood of your getting into an accident. Without getting into an accident, you may end up paying the deductible amount in a few years' time with this additional benefit.

An interesting point to remember is that with Allstate, you also get accident forgiveness. An accident can cause your rates to skyrocket, so an accident forgiveness benefit can potentially save you thousands. The two-for-one vanishing deductible and accident forgiveness may make Allstate’s program the most worthwhile if you can afford the higher premium costs up front. Again, it all depends on the likelihood of your getting into an accident.

Possible alternative

An alternative may be to opt for a $1,000 deductible and then set aside $1,000 in a "rainy day fund." You won’t need to pay extra each month for the disappearing deductible feature, and you’ll have a lower premium payment. For a disciplined person, a savings account can be the best financial option over a potentially costly vanishing deductible.

Finally, you should follow the steadfast rule of car insurance, which is to shop around for the best car insurance rates. These four companies have a vanishing deductible feature but may be more expensive overall. Getting quotes can help you find a cheaper company that will save you more, regardless of vanishing deductibles.

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