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Car accidents can cost you hundreds or even thousands of dollars depending on your car insurance deductible. That can cause significant financial strain.
There is a way to avoid a hefty deductible, though. Many insurance companies offer diminishing deductibles, which reward drivers who are accident-free or who don’t get convicted of traffic violations.
What’s a Diminishing Deductible?
A car insurance deductible is the amount taken from your insurance check if you file a claim. Collision and comprehensive insurance generally have deductibles. For example, if you have a $500 insurance deductible and the claim settlement is $5,000, the insurance check is $4,500.
But with a diminishing deductible, that $500 deductible may shrink to zero if you’ve been a good driver for a specified period of time.
A diminishing deductible is sometimes called a “vanishing” or “disappearing” deductible. It’s an additional coverage that rewards you for being a safe driver. Your policy’s deductible amount decreases by a certain amount as you avoid accidents and maintain a clean driving record. The exact amount and required period of good driving will vary by car insurance company.
Here’s an example: Let’s say you have a $500 deductible and your insurer offers a diminishing deductible plan that lowers your deductible $100 every year you maintain a safe driving record. If you have a clean driving record for three years, you could earn up to $300 off your deductible. If you make a collision or comprehensive insurance claim, only $200 would be deducted from the insurance check, instead of the original $500 deductible amount.
The table below shows the average claim amounts countrywide for collision and comprehensive claims. If your collision damage was $4,601 and you had a $500 deductible, the insurance check would be $4,101. If you had a diminishing deductible and earned a $300 credit off your $500 deductible, you would owe $200 and the insurance check would be $4,301.
Average Insurance Claims Amounts
Diminishing Deductible Rules
If your auto insurance company offers a diminishing or vanishing deductible, it’s important to understand the rules and eligibility requirements before adding it to your policy. Here are a few requirements you may encounter.
Clean driving record
To add a diminishing deductible feature to a policy, most insurers require a clean driving record (meaning no at-fault accidents). For example, to add diminishing deductible insurance to the AARP Auto Insurance Program from The Hartford, all drivers on the policy must have a clean driving record for three consecutive years.
Insurance claim limitations
Usually a diminishing deductible only allows one claim to be filed and then the deductible will reset (meaning you’ll have to start over and your deductible diminishes based on your policy plan). No matter how many drivers are on your policy, you can use the reduced deductible only once. For example, a diminishing deductible from National General Insurance resets the deductible to the original, full deductible amount after you use it.
Deductible reset
An insurer usually resets your deductible back to the original, full amount if you make certain changes to the policy. For example, Direct General resets the deductible back to the original amount if you remove comprehensive and collision coverage and then add it back later on.
Insurance Companies That Offer a Diminishing Deductible
It’s important to note that car insurance companies may have different rules and costs for a diminishing deductible. Here are some examples.
- Allstate. You can get deductible rewards for Allstate car insurance by adding the Allstate Safe Driving Bonus coverage to your policy. With this feature, you receive $100 off your collision deductible the day you sign up, plus an additional $100 off each year that you have a clean driving record (up to $500).
- American Family. Your collision and comprehensive coverage deductible is reduced by $100 for every year that you don’t file a claim when you have the diminishing deductible from American Family. Drivers with six-month policies would see their deductible drop by $50 for every six months they’re claims-free.
- Erie. The diminishing deductible program from Erie auto insurance is part of the Erie Auto Plus package. For every consecutive, claims-free policy year, the comprehensive or collision deductible will be decreased by $100 up to a $500 maximum. Note that Erie sells insurance in 12 states so it may not be available where you live.
- Liberty Mutual. This company offers a “deductible fund” for which you contribute $30 each year from your premium while Liberty Mutual contributes $70. The deductible amount reduces by $100 for every year you maintain a clean driving record (up to $500). The money in the fund is used to reduce the amount you pay out-of-pocket if you file a claim.
- MAPFRE. Diminishing deductible credits are included in coverage from MAPFRE. They are not sold as an extra benefit. You automatically accumulate credits toward your deductible after one year of being accident-free. You get a $50 reduction for the first four years of safe driving. In the fifth year, your deductible is lowered by $100, for a maximum deductible reduction of $300. MAPFRE sells insurance in 14 states so availability is limited.
- National General. The diminishing deductible program from National General allows you to earn a 25% credit on your collision and comprehensive deductibles for every claim-free annual renewal. After four years of claim-free driving, your policy has a $0 deductible. That credit goes away if there’s a collision and comprehensive claim payment.
- Nationwide. The vanishing deductible for Nationwide car insurance is offered as an optional policy feature. For each year you have a good driving record, you earn $100 off your deductible (up to $500).
- Progressive. The Deductible Savings Bank coverage from Progressive auto insurance subtracts $50 from your policy’s collision and comprehensive deductible for each six months that you are accident- or violation-free. You could wind up dropping your deductible down to $0.
- Safeco Insurance. You get a diminishing deductible as part of the Superior auto coverage level from Safeco car insurance. It reduces your auto insurance deductible by $100 every year you have a clean driving record (up to $500). This coverage level also includes features, such as accident forgiveness and new vehicle replacement.
- Travelers Insurance. The Premier Responsible Driver Plan with Travelers auto insurance includes a decreasing deductible. This coverage gives you a $50 credit toward you deductible for every six months you’re accident-free (up to $500).
Not every auto insurance company offers diminishing deductibles or may only offer it in certain states.
Alternative Insurance Savings For Good Drivers
If you don’t qualify for a diminishing deductible or you don’t want to pay extra for it, there are likely other ways to shave some dollars off your auto insurance bill if you’re a good driver.
Usage-based insurance
Usage-based car insurance tracks your specific driving, such as speeding, hard stops, mileage and phone use. This is done through a device installed in your vehicle’s OBD-II port, a smartphone app or through systems built into the vehicle (such as OnStar or ConnectDrive).
Usage-based auto insurance programs reward safe drivers. For example, Drivewise From Allstate offers up to 10% cash back for signing up and up to 25% cash back for every six months of safe driving. Allstate rewards points for completing safe driving challenges.
Discounts for usage-based auto insurance can range anywhere from 5% to 40%, depending on the car insurance company. Here are some companies that offer usage-based car insurance:
Safe driver discounts
Insurance companies love safe drivers and some insurers offer a discount if you keep a clean driving record. A safe driving discount can generally range anywhere from 10% to 40%.
An example is Geico’s Five-Year Accident-Free Good Driver discount. This discount gives drivers that have a five-year clean driving record the opportunity to earn up to a 22% discount on most coverage types.
In addition to safe driver discounts, insurance companies offer many other car insurance discounts:
- Good student discounts offer insurance savings for full-time students who maintain good grades. There are also other types of student car insurance discounts that may save you money.
- Full payment discounts are insurance savings for paying the policy’s premium in full.
- Responsible payer discounts help you save when you pay the auto policy premium on time.
- Multi-vehicle discounts help you save when you have two or more vehicles in your household on one insurance policy.
- Multi-policy discounts provide savings when you buy other types of policies in addition to auto insurance, such as homeowners, renters, condo, boat, motorcycle or RV insurance.
- Defensive driving discounts offer auto insurance savings when you take a defensive driving course.
- Automatic payment discounts can apply when you set up automatic payments for your bill.
With so many choices for car insurance companies, it can be hard to know where to start to find the right car insurance. We've evaluated insurers to find the best car insurance companies, so you don't have to.
Diminishing Deductible FAQs
If it’s free, a vanishing deductible is well worth it. But if a car insurance company charges for the perk, compare the savings you might get from a vanishing deductible to how much more you will pay for the policy add-on.
If you’re a safe driver and you don’t drive much, you may be better off keeping money aside for a deductible instead of paying for something you might not ever use.
On the other hand, if you drive a lot, a vanishing deductible might be worth the additional cost. For example, if you have a long commute, your chance of an accident is greater than that of a remote worker or someone with a short commute, so paying for a diminishing deductible may be a smart move.
At this time, Geico does not offer a vanishing deductible. But Geico does offer other options that could save you money, such as accident forgiveness insurance, a safe driving app (which you can use to earn safe driving discounts) and many types of car insurance discounts.
Deductibles apply to collision and comprehensive claims. These types of claims can happen if you hit a pole, your car is damaged by a falling tree, the car catches fire or other problems that are specifically covered by collision and comprehensive insurance.
Not all auto insurance claims have a deductible. There’s no deductible in cases such as these:
- You cause an accident and someone else is making a claim against you.
- Someone else crashes into you and you’re making a claim against their insurance.
If you cause an accident, a diminishing deductible doesn’t save you from a rate increase. Generally, if you are found at-fault for an accident, it’s considered a “chargeable accident,” which can result in a rate increase at renewal time.
If you’re interested in an add-on that will help you avoid a rate increase if you cause an accident, consider accident forgiveness insurance.