Paying auto insurance premiums is not something most of us look forward to. It is a necessary part of being a responsible driver though. Most insurance companies will allow you to pay your premiums in installments. Here's what you need to know about doing that.
Easier Monthly Payments
For many people coming up with the full amount of a 6 month or one year policy at one time can be troublesome. This is especially so if you have several vehicles on a policy. Paying your auto insurance payments in installments will make it easier for you to pay your insurance without having a huge gap in your checking account up front. It's a popular option for most people which is why most insurance companies now offer the option of paying over time.
Pay 8 Months for 1-Year Policy
Most insurance companies will be able to split up the payments so that you pay for 8 months, then not pay anything for the last 4 months of your policy. This can feel like a benefit since you will have several months payment free. Some companies will offer something similar to this on shorter policies as well. It's not uncommon to pay for 4 months on a 6 month policy.
More Money out of Pocket
If you are paying your insurance on monthly installments you need to be aware that most insurance companies will tack on a fee to do this. It can be as much as $10 a month additional for the privilege of paying over time. So a policy that would only cost $360 for a full year could end up costing you $480 total after these fees are applied. If your policy is low enough for you to comfortably afford paying it at one time, this is a good money saving option.
Chance of Cancellation
With an installment plan the insurance companies don't show a lot of leniency if you are late or miss a payment. If you pay your premiums in advance you can be assured of having coverage for the full amount of time. With an installment plan your policy can be cancelled after just one missed payment. Some companies will cancel the policy as early as 5 days after the payment due date.
Most insurance companies will require a down payment if you are making installment payments. This is the case even after you've established yourself with the company. You could have had 3 policies with them in the past and the first payment on the renewal policy will still require a down payment.
This can be seen as a pro or a con depending on your situation and how you generally pay your bills. When you make installment payments most insurance companies will require you to pay your monthly premiums by automatic debit. This means that the money comes out of your checking account each month on the same day. If you keep your account at the bare minimum and the payment comes out, you can easily overdraw your account. Automatic payments are great for those who can keep up with their bills and plan properly, not so great for those who have a hard time remembering or writing down their other purchases.
Whichever method you choose is up to you. You need car insurance to drive. Having the option of paying the policy over time can be a great benefit to many people.