What’s A Diminishing Deductible For Car Insurance?

If you file a comprehensive or collision claim for damage to your car, your insurance company is going to deduct a certain amount from your claims check. That’s called the insurance deductible. It can range from $250 to $1,000 (or more).

But you may be able to take the sting off your deductible amount. Many insurance companies offer what’s known as a diminishing deductible, which rewards safe drivers who avoid car accidents and traffic violations.

What’s a Diminishing Deductible?

A diminishing deductible is a car insurance coverage that reduces your deductible amount if you’re a safe driver. Your policy’s deductible amount decreases by a certain amount as you avoid accidents and maintain a clean driving record. A diminishing deductible is sometimes called a “vanishing” or “disappearing” deductible. The exact amount and required proof of good driving varies by car insurance company.

Collision and comprehensive insurance work like this: 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.

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 that 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 $4,822 and you had a $500 deductible, the insurance check would be $4,322. 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 $4,622.

Average Insurance Claims Amounts

Coverage type	Average claims amount
Collision insurance	$4,822
Comprehensive insurance	$1,284
Source: National Association of Insurance Commissioners Auto Insurance Database Report 2023

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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 car insurance 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 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.

• AAA. You can get a disappearing deductible through AAA car insurance, depending on your regional club. For example, this coverage is available to Ultimate Plan members of AAA Auto Club South.
• AARP. A disappearing deductible is available through AARP car insurance in some states. Once all drivers on your policy have a clean driving record for three consecutive years, your collision deductible will reduce by $50 each year until it reaches zero.
• 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.
• Elephant. You can add a diminishing deductible if you have collision insurance with at least a $500 deductible with Elephant. Your deductible will be reduced by $100 for annual policies and $50 for six-month policies for each policy term that you remain accident free, up to $500.
• 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.

Increase Your Deductible Amount

You may be able to save money by hiking the amount of your car insurance deductible. Low deductible amounts—such as $250 or $500—usually mean your car insurance rates are higher. That’s because a lower deductible means the car insurance company is paying out more if you make a claim. On the flip side, the higher your deductible, the lower your rates. That’s because the insurer is paying out less money if you file a claim.

Drivers who increase their car insurance deductibles can net a saving between 7% and 28% a year on average, according to Forbes Advisor’s analysis. How much you save by raising your car insurance deductible depends on your current deductible, your new deductible and your insurance company.

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.

Diminishing Deductible Frequently Asked Questions