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UPDATED: Mar 13, 2020
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When you go to sign up for auto insurance, you will be presented with various payment options according to the company that you sign up with. Most will sell insurance to you in either six-month or one-year periods.
This means that your rate will stay the same for that period and will not change until a new term comes up. You can choose to pay the amount of your premium right out of the gate, and you might even be offered some amount of a discount for this. Otherwise, you will be able to pay the premium on a monthly basis.
Paying Your Auto Insurance Premium
When you are figuring out your premium payments, you can rest assured that the amount you are quoted when you sign for your auto insurance policy will not change throughout the policy term.
One thing that could potentially lower it, however, is if you are able to make the entire premium payment when you sign up for the insurance coverage.
The insurance company is more than happy to get all of its money up front, so they may offer you a small discount for doing this because they only have to process one initial payment for the entire duration of your policy.
One of the top reasons to consider structuring your payment schedule this way, besides the obvious discount, is that you will not have to worry about making other payments the entire time that you are covered for a policy term.
The reason this is key for many drivers is that if you miss a payment during the policy term, the car insurance company is entitled to cancel your coverage. This means that you would not be able to file a claim and have your insurance policy take care of it.
Another thing that happens if your car insurance company cancels your policy because you have not paid is that you will have a harder time picking up another company for coverage. This is because every major car insurance company charges more for someone who is not currently insured as a driver.
Getting Your Premium Payment as Low as Possible
Regardless of when you decide to pay your car insurance premium, you want to make sure you are as paying as little as you have to for the amount of coverage that you need or want. The way to do this is to check into all discounts that are available through your auto insurance company.
In addition to being able to get a break for paying the entire amount of your premium right away, you could get additional discounts for insuring other lines with the same company.
This would mean that if you are a homeowner, you could move your homeowner’s insurance policy to the same company that provides your auto insurance coverage. This arrangement for insurance is called bundling.
Insurance companies want as much of your business as they can get, so they are happy to give discounts for expanding your different lines of insurance coverage with them.
Besides looking into discounts for additional lines of coverage, it may also be a good idea to have other members of your household insured under the same policy.
For example, it is almost always cheaper for a married couple to have both spouses under the same auto insurance plan rather than maintaining two separate auto insurance policies. This might not be true, however, if one spouse has a particularly bad driving record with a long history of accidents and tickets for moving violations.
That would be a good reason to have separate car insurance policies.
Last Thoughts on Paying Car Insurance Monthly or Yearly
The decision of how to structure your car insurance premium payments is mostly up to you as the insured. For some companies, you are able to get a discount if you agree to pay the full amount of your auto insurance premium up front.
The amount of a discount you could get will be different for each company, which is why it is important to ask your auto insurance agent about this in advance before setting up your payment plan.
If you want to make changes to your payment plan, the best thing to do is contact your auto insurance agent by phone to see what options are available to you.