An enticing way to reduce your out of pocket expenses on car insurance is to purchase vanishing deductibles. Vanishing deductibles is a feature offered by several insurance companies. It reduces your deductible by $100 for every year you go without filing a claim. It is important to consider all aspects of the coverage to determine if it is right for you.

Pros of Vanishing Deductibles

• Instantly receive a $100 credit towards your deductible the moment you add vanishing deductible to your policy. For example, even if you selected the vanishing deductible coverage only two weeks prior to an accident, you will receive $100 off your deductible.


• Eventually get your deductible reduced to zero even if a zero deductible is not typically offered by the particular insurance carrier. For instance, someone purchasing comprehensive coverage may not be able to purchase a deductible lower than $100. However, by purchasing vanishing deductible coverage a zero deductible is possible.


• Save money by purchasing a high deductible combined with vanishing deductible. Sometimes a low deductible is not in reach because it raises the cost of insurance so much. By combining a high deductible with vanishing deductible coverage, it may be possible to have a low deductible at the time of a loss. Let’s say you purchased a car insurance policy with $1000 deductibles on both comprehensive and collision coverage. You also purchased vanishing deductible coverage at the same time. Six years later you hit a deer. Instead of paying the original $1000 deductible, you will only be required to pay $400.

Vanishing deductibles can certainly be helpful. Having the coverage benefits good drivers because they are able to reduce the amount of their emergency fund reserved for car insurance claims. As the claim free years tick by, less money is required to repair your vehicle after an accident.

Cons of Vanishing Deductible

• You pay to save. Currently to get vanishing deductible coverage on your auto policy, you pay extra. The cost varies based on the number of full coverage vehicles on your policy and driver risk. For example, a family with three full coverage vehicles and a teenage driver will pay more for vanishing deductible coverage than a single driver with two vehicles and only having full coverage on one.


• Lose the credit when you switch vehicles. That is right, if you switch vehicles after two years of paying for vanishing deductible coverage, you lose the deductible reward on the replaced vehicle. The prior earned deductible reward does not extend to your newly purchased vehicle. The reward starts all over with a newly added vehicle.


• Lose the credit when you switch insurance carriers. Are you tired of rate increases and poor customer service? The extra money you have been paying for vanishing deductible will be lost if you switch insurance carriers. For instance, you purchased vanishing deductible coverage and go three years claim free. Now you want to switch insurance carriers, but you don’t want to lose your reduced deductible which you have been paying extra money to get. You will need to save a significant amount of money to make switching worthwhile.

The additional cost of vanishing deductible coverage is what really makes it lose its appeal. It is almost as if you are using your car insurance as a savings account. You are paying extra in order to get money out at a future time. Serious consideration should be taken when deciding if vanishing deductible coverage is a good idea for you.

Things to consider before purchasing vanishing deductible coverage

• Do you plan on sticking with your insurance carrier for a long period of time?
• Do you plan on keeping the same vehicles for a long period of time?
• Do you have an emergency fund in place to cover your deductible?

Whether you choose vanishing deductibles or not, remember you purchased it. Selecting a coverage which is not offered by all insurance carriers makes it difficult to compare insurance rates. If you have carried the coverage for a long period of time, you do not want to lose out on your rewards. Purchasing a coverage like vanishing deductibles is easy to forget so remember to always review your renewal paperwork.