Disappearing Deductible

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Whether your car is damaged in a parking lot fender-bender or a multicar pileup on the highway, it all generally leads to the same thing—the stress and hassle of filing a claim, getting your vehicle repaired, and, inevitably, an increase to your car insurance premium.

However, there may be a very simple way for you to avoid paying part, and maybe even all, of the out-of-pocket deductible that typically applies when you have an accident, by adding the Disappearing Deductible option on your car insurance policy.

To understand how a Disappearing Deductible might benefit you, it’s important to first know how your deductible works.

If your car needs repairs due to a crash, vandalism, or other similar incident, your auto insurance policy deductible is the amount that you would owe before insurance kicks in. Your deductible is probably either $500 or $1,000, but you will want to speak with your local insurance professional or check your policy documents to know for sure what you will owe. If you have any trouble finding this information, please reach out to the BayCoast Mortgage team for assistance.

In addition, it’s important to know that your deductible generally applies only to the collision and comprehensive portions of your policy. Collision is the coverage area that is activated when you are in a car accident, no matter who is at fault. Comprehensive coverage is for damage to your vehicle caused by events considered outside of your control other than collision losses, like a flood, fire, or falling tree.

Most importantly, you are responsible for paying your deductible if you are found to be at-fault for a crash that damages your vehicle. You typically also have to pay your deductible if you’re involved in a car accident where fault is not applicable for comprehensive coverage—like if a tree falls on your car. Also, even when you’re not at-fault for a vehicular accident, you could still be responsible for paying your deductible, particularly if the other driver is either underinsured or has no insurance at all.

Now that we’ve provided some straight talk about your car insurance deductible, we’re ready to tell you more about how the Disappearing Deductible policy option works. We think you’ll be particularly interested in how this endorsement might gradually erase the deductible amount you are responsible for in an accident.

How the Disappearing Deductible car insurance policy option rewards you for safe driving

If your safe driving behaviors have helped you avoid a car accident, a speeding ticket, and other traffic violations over the past year or more, then you have what the insurance industry calls a “clean driving record.” Most insurance carriers like to encourage and reward safe drivers like you by offering additional—and potentially cost-saving—car insurance options, such as Disappearing Deductible Rewards.

Here’s typically how this rewards program works:

  • Every year that you don’t have an accident or traffic violation, you earn a dollar-value credit that is applied toward your deductible.
  • The credit amount you earn will vary depending on your insurance company, but generally ranges from $50 to $100.
  • Some companies offer you an immediate credit of up to $100, just for signing up for their program.
  • There is a possibility that you can knock your deductible down to $0 if you rack up multiple years of safe driving and your insurance company allows it.

No matter how many credits you’ve earned at the time of an accident, by having the Disappearing Deductible option on your policy, you might owe substantially less than you would have without this program. If you get in an accident, however, your deductible could reset back to the original amount, often regardless of who is at fault. Then, you’ll have some work to do over the next year to get back in good standing with your insurance provider and reestablish eligibility.