Some insurance companies want to reward drivers who do well on the road. In many cases, this is a way of awarding reliable customers.
A vanishing deductible is a type of special offer from some insurers that fits this mold. It is a simple way for insurance companies to reduce how much you pay out of pocket for coverage.
Not everyone qualifies for this deductible option. Not all insurers offer this type of insurance either. Here is what you need to know about enrolling in this type of feature.
What Is A Vanishing Deductible?
A vanishing deductible is a feature available on some auto insurance policies. The details differ from one insurer to the next. In short, the insurance company agrees to reduce your deductible for each year you are a safe driver.
Your deductible is the amount you pay before the insurance company covers your claim. For example, you have a $1,000 deductible on your car insurance. If you are in an accident with $2,500 worth of damage, the insurance company will pay you $1,500. You must pay the remaining $1,000 as your deductible cost.
A vanishing deductible aims to help reduce that deductible. For example, the company may offer $100 off your deductible every year you are a safe driver. In the example above, your deductible becomes $900. If you need to file a claim, the insurance company would pay $1,600 at this point.
What Is Safe Driving?
Safe driving can differ from one company to the next. There are several definitions, but here are two common ones.
- You do not file any claims with the auto insurance company in that 12-month period. This includes any type of claim related to your policy.
- You do not have any moving violations during that 12-month period. This includes reckless driving, speeding, or other moving violations. You do not have any points on your driving record.
Most of the time, vanishing deductible features have limits. Most have an upper limit. They may cover only up to $500, for example, off your deductible. If you file a claim, most policies will not instantly boost your deductible (although some will). It is important to learn about the details of the policy before choosing it.
If you are ready for a new car insurance plan, find out if a vanishing deductible feature is available to you. If it is, it could help you to save money.
If a vanishing deductible is available, compare it to other features. This includes other rewards and discounts that help save you money.