Vanishing Deductible: Is it Really A Value?

by Kathy V.

Nationwide Insurance's vanishing deductible seems like the bomb (the good bomb). If you are a good driver like me, it looks like it pays to get the vanishing deductible option. Thus, you can get a $500 deductible on your collision, comprehensive (other than collision) or uninsured/underinsured motorist coverage, and watch it drop by $100 for every year of safe claim-free driving. You can buy a policy with a higher or lower deductible ($500 is the highest deductible you can essentially erase). After five years, if you're paying a premium for a $500 deductible, you really don't have one, at least until after you screw up. Also, if you sign up for this vanishing deductible program through Nationwide, you get a $100 credit as of July 2011. That might change.

Other U.S. automobile insurance companies (such as Allstate Insurance Company or The Hartford) offer the same or similar programs, but Nationwide's advertising angle and explanation is truly catchy (so is their too-cute world's best spokesman). No matter which company you choose with this sort of program, it is not only rewarding you for being a safe claim-free driver, but you are also being rewarded you for your loyalty. And they should; the average insurance policy takes about 5-7 years to become profitable to the insurer who sold it.

By the way, according to representatives at Nationwide's Insurance Call Center at 877-669-6877, the claim-free requirement means completely claim free. If you are involved in an accident that another driver was at fault for, you will need to pursue your damage and personal injury claims through their insurance company if they have one. If you present a claim the claim to Nationwide, then any deductible reductions will be honored, but after then, you're right back at the original deductible amount with no credits. That is even if Nationwide is able to get reimbursement from the at-fault driver or his/her insurance company.

The thing about this policy option is that if I'm already a good driver, my premiums are already low. I don't need to switch to Nationwide for this program. If I was a poor driver, the idea of paying a lower premium for a higher deductible and then watching it drop would have some appeal, assuming that I was able to suddenly morph into a great driver upon purchasing this option. I guess that the best person to choose this Nationwide policy option might be a person who not only a good driver, but a lucky one, and who already has Nationwide and has no intention of switching to another company.

This article is approved for informational purposes and is not intended to take the place of competent local legal counsel.

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