Who Has the Best Vanishing Deductible Policy?

Many car insurance companies have begun to offer deductible reduction programs, but two of the best-known providers with that option are Allstate and Nationwide. On the surface, both companies appear to be offering very similar products. Once you research them, however, differences become more evident. If you’re considering buying insurance from one of these companies, it’s worth investigating the way the deductible rewards are applied so that you can get the most for your money.

What is a Vanishing Deductible?

Though the policy details will vary from one company to the next, the basic premise behind vanishing deductible policies is the same. Each year that you drive without an accident results in a lower deductible. This means that, if you do get into an accident, you won’t have to pay as much for your portion of the repairs.

How Allstate’s Deductible Reduction Amount Works

Allstate’s deductible rewards program is part of its “Your Choice Auto” package, which couples the deductible reward with accident forgiveness and an annual safe driving rebate. There are two versions to this package, Gold and Platinum. Under the Gold Protection plan, you get one “free” accident on your policy before your rates begin to increase. With Platinum, your rates do not increase at all from accidents as long as you carry the Platinum package.

The first day that you sign up with a Your Choice Auto policy, you will get your first $100 rebate. For each subsequent year of safe driving, your deductible will drop further. In most cases, your deductible will continue to fall until you reach zero, but a few states will only allow your deductible to drop to $100 no matter how many safe driving rewards you earn.

Any accident you’re involved in will cause you to lose your deductible reward, even if you’re not at fault for the accident. The deductible will reset, and it will begin to go down again after the first year following your collision. Other issues, like tickets, will not affect your deductible, but they could have an impact on your policy.

You will have to pay extra for the Your Choice Auto package, although the exact cost increase isn’t widely advertised. Platinum protection costs more than Gold, and additional perks like the new car replacement coverage must be added separately and cost an extra fee.

How Nationwide’s Vanishing Deductible Works

Nationwide offers a program that reduces your collision deductible by $100 for each year of safe driving, up to a maximum of $500. This means that your deductible can only drop down to zero if you have a base deductible of $500; higher deductibles cannot be reduced to zero.

Unlike Allstate’s program, Nationwide’s vanishing deductible can be purchased a la carte, so you don’t need to pay for any extra features. It will cost you approximately $60 per year for the first car, and $10 for additional cars that you add the vanishing deductible to. The deductible reduction begins after the first year of safe driving, so you don’t get your discount immediately.

Another important difference between Nationwide and Allstate is that the Nationwide vanishing deductible can be lost due to moving violations. This means that if you get a ticket for certain qualifying moving violations, your deductible will be reset even if no accident occurred.

Which Company Offers the Best Deal?

Before choosing a company, be sure to check with your state laws to see how they apply to the deductible reduction programs. For example, Allstate no longer offers Your Choice Auto packages in California due to customer complaints. Similarly, safe driving rewards and rebates are applied differently in New York than in other states. If you live in a state with special insurance laws, knowing those laws can help you save money and avoid unnecessary expenses.

Also be aware that while Allstate and Nationwide are two of the best-known companies offering deductible reduction programs, several other insurers may offer similar programs and rebates. For example, The Hartford insurance company offers deductible rebates to safe drivers. Other small or local companies may provide worthwhile discounts and rebates as well. Comparison shopping will help you find the best match for your needs.

Ultimately, it’s up to you to decide which company’s policy is best for you. Depending on the cost of your coverage, the Nationwide policy might be cheaper, but the Allstate program comes with more features. Of course, you can choose not to get a deductible reduction at all. It’s probably cheapest to just put money aside in a savings account to pay for a deductible if an accident ever happens; in the long run, that will cost substantially less than paying higher premiums for rewards.

Case Studies: Vanishing Deductible Policies Comparison

Case Study 1: Allstate’s Deductible Reduction Amount

Allstate offers a deductible rewards program called “Your Choice Auto” that includes accident forgiveness, an annual safe driving rebate, and deductible reduction. The Gold Protection plan provides one free accident before rate increases, while the Platinum package ensures no rate increase from accidents as long as you have the Platinum coverage.

The deductible reduction starts with a $100 rebate on the first day of signing up, followed by further reductions each year of safe driving. In most cases, the deductible continues to decrease until reaching zero, but some states may have a minimum deductible of $100.

Accidents result in the loss of the deductible reward, even if not at fault. The Your Choice Auto package comes at an additional cost, and the Platinum protection and extra perks require separate fees.

Case Study 2: Nationwide’s Vanishing Deductible

Nationwide offers a vanishing deductible program that reduces your collision deductible by $100 for each year of safe driving, up to a maximum of $500. The deductible can only be reduced to zero if your base deductible is $500; higher deductibles cannot reach zero.

Unlike Allstate, Nationwide’s vanishing deductible can be purchased separately without additional features. The cost is approximately $60 per year for the first car and $10 for each additional car. The deductible reduction starts after the first year of safe driving. However, moving violations can reset the deductible, even without an accident.

Case Study 3: Liberty Mutual’s Deductible Rewards

Liberty Mutual offers a deductible rewards program known as “Deductible Fund®” that allows policyholders to earn and accumulate deductible credits over time. The program is available for both auto and home insurance policies.

Under the Deductible Fund® program, for every consecutive policy year that remains claim-free, Liberty Mutual adds a deductible credit to the policyholder’s account. The deductible credit accumulates over time and can be used to reduce the deductible amount in the event of a covered claim.

The deductible credits earned through the Deductible Fund® program are capped at a certain limit, typically around $500. Once the maximum deductible credit is reached, policyholders are no longer eligible to earn additional credits. However, the accumulated credits remain available for use as long as the policy remains active.