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UPDATED: Mar 13, 2020
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Buying auto insurance is a veritable necessity if you want to drive your vehicle. Most areas have a legal requirement for drivers to carry a minimal amount of car insurance, and your auto lender may also have additional requirements.
Many drivers set up their premium with affordable monthly payments, but you may be thinking about paying the remaining balance off today.
Most providers will happily accept an early premium payment from you. However, you should be aware of the benefits associated with paying the premium upfront at the time you purchase your coverage.
If you plan ahead and pay your premium in full, you may be able to save a considerable amount of money on your insurance coverage.
Compare car insurance quotes and options to find the insurance company that’s right for you. Enter your zip code above to get started.
When You Request a Quote for Coverage
When you initially request a quote for car insurance from a provider, you may need to provide the insurer with a considerable amount of information. This includes:
- Your contact information
- Details about your driving record
- The VIN for your car
- Information about any other drivers who may be included in your coverage
As soon as you receive a quote, you may have the option to make a payment and bind coverage immediately. Most providers will not extend coverage until they receive at least a partial payment from you.
Understanding Your Payment Options
Term lengths for auto insurance can vary from three to 12 months in most cases. Your premium for a full year of coverage may be as much as $1,000 to $2,000 or more.
Because of this, many drivers set up installment payments. This may be monthly or quarterly payments in most cases, but you also have the option to pay the entire premium amount in full.
Drivers who pay the premium amount in full may qualify for a discount from most providers.
Auto insurance providers avoid administrative fees associated with the ongoing billing process when you pay upfront, and they often extend this saving to the client in the form of a reduced rate.
If you plan to pay your premium in full, it is best to do so upfront so that you can take advantage of potential savings that may be available to you.
Some providers may give you a partial discount if you pay the remaining balance off after a few months, but this is not always the case. By planning ahead, you may be able to pay your next premium amount off in full to take advantage of the possible discount.
How to Make Your Premium More Affordable
Paying your premium amount in full is a smart idea because it can result in financial savings. It also may help you to avoid a potential lapse in coverage related to late payments or non-payment.
Paying the full premium up front can be challenging for many drivers on a tight budget, but there are some steps that you can take if you want to make use of this discount quickly.
The lower your auto insurance premium is, the more affordable your coverage will be to pay in full. With this in mind, it makes sense to shop around and to compare rates offered by leading providers.
Providers will review numerous factors before determining your rate, and this includes:
- Your driving history
- Your claims history
- Your credit rating
- The type of vehicle you drive
- The repair and replacement costs for your vehicle
- Your zip code
Because each auto insurance company analyzes these important factors in different ways, you may save a small fortune on your premium when you compare several quotes online.
You may be surprised by how different some of your premium quotes may be.
Remember that it is wise to compare rates again approximately every six months so that you can always find the lowest price available.
Insurance rates, as well as the factors that determine the rates, can change within a short period of time, and periodically comparing rates lets you take full advantage of these changes.
Drivers can save $859/yr* by comparing car insurance
*based on a survey of 1,000 car insurance customers
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Getting a Higher Deductible
Shopping around for low insurance rates is only one option to consider if you want to save money on car insurance. Another idea is to request a higher deductible amount when you shop for new quotes.
A higher deductible has a direct impact on the premium, but you should only choose a higher deductible amount if it is affordable for you to pay. The deductible must be paid each time you file a claim against your coverage.
Improving Your Credit Scores
Insurance providers review your credit rating each time you apply for new coverage or when your policy renews. Lower credit scores can directly result in a higher insurance premium.
It can take months of regular effort to improve a lower credit score, but this is an effective way to save money on insurance in the future.
You can create a plan to pay off outstanding debts over time and to make all payments on time to improve your credit rating in the months to come.
If you are not aware of what your credit rating is, you can request a free copy of your report once per year. If you notice any information that is not correct, take steps to update the information. This may result in a higher rating within a very short period of time.
Focusing on Your Driving Record
Your driving record is another area that you can focus on if you want to qualify for better rates in the future. In some cases, even a single traffic citation or accident on your record can result in higher rates.
If you want to improve your driving record over time, implement these tips into your actions behind the wheel:
- Drive when conditions are ideal
- Maintain your vehicle in great condition
- Drive at or below the posted speed limit
- Be a courteous driver
- Avoid driving when you are upset or fatigued
- Be observant of all traffic signs
How to Manage an Upfront Payment on a Tight Budget
The best way to take advantage of the savings associated with paying a premium up front is to pay the full premium amount on day one rather than wait until you are a few months into the coverage term.
Managing this often large payment is easier to do when you lower your premium amount using some of these thoughtful tips.
You may also more effectively make a full premium payment when you choose a shorter term length.
For example, if your provider offers a three-month term, paying this full premium amount is much more affordable than paying the full amount of six or 12 months. When you are determining your term length, consider a strategic term length.
You may not be able to afford to make a full premium payment on your policy today, but you can start saving. Even if you need to set up monthly payments for your current coverage, you can slowly save up enough money to pay your next premium in full.
If you decide to save money by requesting a higher deductible amount, it makes sense to save additional funds so that you have this money on hand if you need to file a claim.
How to Find a Great Deal on Coverage
Shopping around is one of the best ways to find the lowest premium available, but this process can take a considerable amount of time and effort. Gather all of the information you need to request a quote up-front.
Then, use the internet to conveniently request quotes from multiple providers. While asking for quotes from at least three or four providers is wise, you may be able to identify even more savings available when you request additional quotes.
Enter your zip code into our free rate comparison tool below to find the insurance company that’s right for you.