Motorists may be able to arrange policies with disappearing deductibles through a few companies. In such cases, there are set amounts for each coverage component at the start but they start going down for every year (or six-month term) if there are no accidents or traffic violations. It is a way of rewarding policyholders and people like the idea of paying less when they have a claim. That is why some carriers are offering lower or vanishing deductible car insurance to attract certain types of drivers.
Most vehicle insurers prefer to have a good level of deductibles in their policies and usually motorists cannot go below such figures because companies like to keep a minimum level of a barrier for claims to deter policyholders from asking compensation for every little thing. And some states may actually require companies to set a minimum level.
But some vehicle insurers offer to reduce the initial deductible amount set in a policy every year, as long as there is no accident or traffic violation. It is a way of encouraging good driving and making their products more attractive to buy.
Some vehicle owners may prefer to set higher deductibles voluntarily so that they can reduce the premiums. However, around fifty percent of motorists prefer and look for lower amounts, according to surveys. So, it is a good way of marketing and differentiating products and capturing applicants wanting to contribute less to claims.
There are a few companies like Nationwide, Allstate, Progressive and The Hartford offering disappearing deductible automobile insurance policies. So, people have enough choices if this is the type of a deal they like to pursue.
Each company may have different rules but here are some of the basics of this arrangement.
- Policies start with standard deductibles you would see in most auto insurance policies, like about $500 for collision and $300 for comprehensive coverage.
- It gets reduced every year (or term) by a certain amount or percentage. In the case of Nationwide, it is reduced by $100 for every trouble-free year. Progressive applies the reduction to every policy term (usually six months) but the reduction is lower too.
- So, there is a chance people can achieve zero deductibles auto insurance after a good spell of trouble-free years.
- Once you have a claim, it resets and you start all over again or start with slightly lower than the initial deductibles.
- It may be possible to get immediate rewards for choosing such an option. For example, Allstate offers a reduction from the start without the need to wait for one year or six months.
- Usually, these policies are more expensive as they are sold as a special plan or there is a flat fee when you choose this option. For example, Progressive charges a small additional premium for choosing to have this option.
Drivers need to crunch the numbers before choosing vanishing (or diminishing) deductibles options. There is a high chance that they will spend more over the years than what they can save. Remember that they need to pay the premium regardless but they can only save with a lower deductible when they have a claim.
Implications of lower, vanishing or zero options suggest that vehicle insurers must be compensated enough to offer such choices. In a way, they let the applicants bet on having an accident and the fee for the bet is collected as an additional premium. This bet only pays when the policyholder requires compensation.
Good drivers wouldn’t be much concerned with its level or prefer to increase car insurance deductibles so that they can save money now on premiums, rather than waiting for something to happen. If you haven’t had an accident for a long time and see the likelihood of it being slim you wouldn’t pay to reduce them. But you may be happy to spend a little bit more for this option when you are not confident that you can keep a clear driving record. In other words, personal preferences and circumstances play an important role in choices.
You can see that getting and comparing automobile insurance quotes is always a good idea and it is a quick way of checking the current market. When you come across with a product like vanishing deductibles vehicle insurance where you are required to pay for the privilege of joining in you may want to get a quote with and without it to decide if it is worth the money. You can also check prices with each of the companies offering such policies to see which one is better if this is the type of option you want to have.