A deductible is the amount of money you put towards repairs before car insurance covers the rest. With a zero deductible car insurance policy, you’re not required to put any money towards repairs: your insurance automatically covers all repair costs.
Under an ordinary car insurance plan in the United States, your car insurance policy will cover the cost of repairing your vehicle. In order for your car insurance policy to cover the cost of repairs, however, you’ll have to pay a deductible. If it’s going to cost $2,000 to repair your vehicle, then you may have to pay a $500 deductible, which means your total compensation will be $1,500. Typically, your insurance company will cut you a check for the estimated cost of repairs minus your deductible.
In Europe and other parts of the world, drivers can purchase zero deductible car insurance. With zero deductible car insurance, a car insurance company will cover damage to your vehicle with no need to pay a deductible upfront.
Although some states in America allow insurance companies to offer zero deductible car insurance, they’re very rare. Most major car insurance companies in the United States do not offer zero deductible car insurance. However, you may find companies that offer zero deductible car insurance for comprehensive coverage, which means you won’t pay a deductible if your vehicle gets stolen or vandalized.
What Are the Downsides of Zero Deductible Car Insurance?
Typically, most insurance companies in America will not offer zero deductible car insurance.
There are too many drawbacks for the insurance company. Insurance companies see zero deductible plans as being risky for their business.
Zero deductible car insurance plans are riskier for car insurance companies. Drivers are more likely to make a claim when there’s no deductible to pay, which means insurance companies will pay more. To balance out this cost, insurance companies will raise rates for drivers.
That means zero deductible car insurance plans are going to be more expensive for drivers. You might save $500 on a deductible when you make a claim, but you’re paying $100 more per month. In most cases, it’s not worth it for the driver.
Some Companies Offer Zero Deductible Car Insurance with Very Strict Requirements
There are some cases when a company may offer zero deductible car insurance in the United States.
Typically, zero deductible car insurance policies come with strict requirements. A car insurance company might offer you zero deductible car insurance, for example, but only if you have a perfect driving record.
Companies are also more likely to offer a zero deductible car insurance policy if you have a perfect credit score.
Consider Getting a Low Deductible Car Insurance Policy Instead
One of the best ways to save money on car insurance premiums is to raise your deductible. You can raise your deductible to $1,000 or higher, for example, to significantly reduce your premiums.
Car insurance companies also let you go the other way: you can lower your deductible and pay higher monthly premiums. If you believe you’re going to make a claim on your insurance policy, or if you feel you can’t handle a high one-time deductible payment, then you may want to lower your deductible and pay higher monthly premiums.
Typically, a car insurance company in the United States will let you lower deductibles to as little as $250 in exchange for higher monthly premiums. It’s not quite a zero deductible car insurance policy, but it’s the closest thing you’ll find.
Remember that Only Certain Incidents Require a Deductible
Many drivers are unaware that they only pay a deductible in certain situations. You don’t typically pay a deductible if your car is stolen or vandalized, for example. Many insurance policies give you the option of paying no deductible on your comprehensive coverage.
For that reason, a zero deductible plan might not give you a huge advantage over an ordinary car insurance plan. Unless you’re planning on frequently getting into accidents and making claims, it’s unlikely that you’ll come out ahead with a zero deductible car insurance plan.
Ask your Car Insurance Company About Zero Deductible Car Insurance
Most car insurance companies in the United States do not offer zero deductible car insurance. However, some companies may offer zero deductible car insurance for certain situations – say, on your comprehensive coverage.
Alternatively, a rare few car insurance companies in the United States offer zero deductible car insurance to drivers with a perfect credit score and perfect driving record. Some car insurance companies even offer what they call a “vanishing” or “disappearing” deductible, which lowers your deductible to $0 after enough years of claim-free, safe driving.
Ultimately, it’s unlikely that you’ll save money with zero deductible car insurance. Yes, you’ll avoid making a $250, $500, or $1,000 deductible payment when you make a claim, but the higher monthly premiums make it unlikely that you’ll come out ahead in the long run.