What is a Disappearing Deductible?

Maintaining a safe driving record comes with its rewards, including eligibility for a car insurance endorsement that may gradually lower your deductible over time.

There’s truly no such thing as a stress-free car accident. Even the smallest fender bender, in which nobody is physically injured, can be very aggravating and end up putting a dent not only in your car but also in your wallet. While having the right car insurance may help minimize the financial impact of a crash, you typically will need to pay the deductible amount listed on your policy, which can range from a few hundred dollars up to $2,500, before your coverage kicks in. However, Austin Insurance may be able to help you decrease the deductible amount that comes out of your own pocket after an accident. Several of the insurance carriers we work with offer a really valuable car insurance option, called a disappearing deductible, that rewards safe drivers by reducing their deductible amount—typically between $50 and $100 annually—each year they go without getting into an accident or being cited for a traffic violation. Of course, we’d love to talk to you in person about the specific ways this credit could benefit you. In the meantime, we’re happy to provide you with some general information about how the disappearing deductible endorsement works.

What does it mean to have a Disappearing Deductible?

Your car insurance deductible amount is probably not top of mind most days. But if you get in a car accident, it is sure to grab your attention pretty quickly. That’s because you’re generally going to be responsible for paying out that deductible amount toward any repairs your vehicle needs or, in the event of a total loss, toward the purchase of a new car.

But your financial responsibilities could be very different if you opt into a disappearing deductible credit. Depending on which insurance company you go with, having a disappearing deductible may even mean that you’re able to work your deductible all the way down to $0 over time.

How does this incredible vanishing act work? Following is a list of the four most important things to know about a disappearing deductible:

1. It typically applies only to your collision deductible. Most insurance carriers offer a disappearing deductible only for the collision portion of your car insurance policy. Collision is coverage that typically pays to repair damages to your vehicle that are caused if you hit another car, or an object like a mailbox or fence. While some insurance companies may also apply a disappearing deductible to the comprehensive portion of your policy, which is coverage that generally protects you from auto losses related to vandalism, malicious mischief, weather conditions, fire, and even a run-in with an animal, it’s not nearly as common.
2. It drops automatically each year that you maintain a safe driving record. Typically, your auto policy deductible stays the same unless you decide to increase or decrease the amount at renewal time. But if you have the disappearing deductible credit, the only thing you need to do for the deductible to go down is to avoid getting into an accident or violating traffic laws. For example, let’s say you currently have a deductible of $500 and decide to enroll in a disappearing deductible program that offers a $100 annual credit. If your driving record is still spotless a year later, your deductible should fall by $100. This means that at the end of the first year you have the disappearing deductible option, your deductible should diminish to $400; at the end of the second year, it should drop to $300; and so on.
3. If you do get in an accident, having a disappearing deductible may lower your financial obligation. While having the disappearing deductible endorsement can’t take away all the stress of a car crash, it may lessen some of the expense. If you’ve accumulated disappearing deductible credits at the time of an accident, you may be responsible for paying only what remains of your deductible rather than the original deductible on your policy. So, continuing the example from above, let’s say you’ve had the disappearing deductible for over two years when you are involved in an accident. Since the program offered a $100 credit every year you remained claims-free, your deductible has diminished to $300. As a result, you will need to pay only this amount—versus paying the original $500 deductible—before your insurance coverage kicks in.
4. Your deductible will reset to the original amount once you use your disappearing deductible credits. If you must file an auto insurance claim, having disappearing deductible credits may save you hundreds of dollars. However, after you use them, you do have to start all over again. So, per the example used above, while you had knocked your deductible down to $300 after recording a couple of years of safe driving, your deductible would bounce back up to $500 again once your accident claim was filed.

Austin helps you explore Disappearing Deductible programs and access other cost-saving car insurance options.

Now that you know how the disappearing deductible credit works and all its potential benefits, you’re probably eager to get signed up for this program and start chipping away at your deductible. It’s important to know that the price, criteria for eligibility, credit amount, and other details of a disappearing deductible program can vary greatly depending on the insurance company. So, it’s a great time to reach out to Austin Insurance for assistance to determine whether this car insurance endorsement would be a good match for you and your particular circumstances.

Some of the things we will explore to see if a disappearing deductible makes sense for you are:

• Your driving record.
• Your accident history.
• The length of your commute.
• How much time you spend on the road.
• The cost to enroll.

Then, if getting a disappearing deductible would be a good move for you, we’ll help make sure you’re enrolling in a program with terms that are the most favorable to you. In fact, when you work with Austin Insurance, we’ll walk you through all your car insurance options and make sure you’re getting the right coverage at the most competitive prices possible. While we’re exploring whether a disappearing deductible is the right choice for you, we would be happy to help you find other opportunities to save on your auto policy through programs such as bundle and save, accident forgiveness, and more.