What does it mean when a policy is ‘fully paid up?’
When your car insurance is fully paid up, it means that your coverage and premium payments are up-to-date. You won't be bothered with monthly payment reminders, and you may qualify for a fully paid-up discount of 12% or more, depending on your insurance company.
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UPDATED: Feb 15, 2022
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- When your insurance is fully paid up, it means that your coverage and premium payments are up-to-date.
- Fully paid up auto insurance can qualify for a 6%-12% discount with certain companies.
- Even with a discount, drivers can maintain cheaper auto insurance rates by comparing companies every few months.
Wondering what “fully paid up” in insurance means? You are not alone — it is one of the most common car insurance questions.
When your policy is fully paid up, it means that your coverage is up-to-date. You do not need to pay any more premiums until your next renewal date, and you may even qualify for an auto insurance discount.
Not sure if it is a good idea for you to pay all of your premiums up-front? We recommend shopping with companies that offer a fully paid-up discount on car insurance. Read our guide now to compare car insurance quotes for free. Keep reading to learn what it means when a policy is “fully paid up” and the different ways you can pay for car insurance.
Not sure if your car insurance company offers a fully paid-up discount? Enter your ZIP code above to search for more affordable car insurance rates.
What happens when you pay off your car insurance policy in full?
Paid-up car insurance means that you decided to pay your total annual rate all at once. The best car insurance companies will provide drivers with different ways to pay. Most allow drivers to pay their premiums monthly, bi-annually, or annually.
If you choose the paid-up option, that means you pay your car insurance premiums all up-front on your policy’s start date.
With paid-up car insurance, you will never miss a payment because you won’t have to remember monthly or quarterly payment dates. Some insurance companies also offer up to 12% or more off your insurance rates for paying in full.
The table below breaks down car insurance rates from the top companies so you can see what drivers pay annually, bi-annually, or monthly:
Average Annual, Bi-Annual, and Monthly Auto Insurance Rates by Company
Insurance Companies Average Annual Rate Average Bi-Annual Rate Average Monthly Rate
USAA $2,537.30 $1,268.65 $211.44
GEICO $3,215.01 $1,607.50 $267.92
State Farm $3,260.00 $1,630.00 $271.67
American Family $3,443.09 $1,721.54 $286.92
Nationwide $3,450.00 $1,725.00 $287.50
Progressive $4,035.52 $2,017.76 $336.29
Farmers $4,194.27 $2,097.14 $349.52
Travelers $4,434.91 $2,217.45 $369.58
Allstate $4,887.95 $2,443.98 $407.33
Liberty Mutual $6,073.45 $3,036.73 $506.12
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These rates are just averages. Your rates could be lower or higher based on your driving record and where you live. Before you buy fully paid-up car insurance, shop around with at least three different companies near you.
Even if you live in one of the states with the cheapest car insurance, comparison shopping is still the easiest way to find an insurer that rewards drivers for fully paid-up insurance.
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Are there discounts for fully paid up car insurance?
Yes, most car insurance companies offer discounts for fully paid-up policies. Discounts can range between 6-12% depending on the company:
- Allstate – 10%
- Farmers – 6%
- Liberty Mutual – 12%
- Progressive – 11%
- Travelers – 9%
Not all, but most of the major insurers offer a discount. However, even if you do not see a discount listed, do not hesitate to ask about paid-in-full discounts before you buy. You may find that smaller local companies offer this discount and more affordable rates than some top companies.
For example, GEICO may be one of the largest and most popular insurance companies, but it charges drivers an installment fee for monthly payments. GEICO does not offer a paid-in-full discount, either.
Other companies, including Liberty Mutual, still give a paid-in-full discount to drivers who pay their entire policy in two payments as well as just one.
Slight differences in car insurance companies like that can make a huge difference in your rates. To save money on car insurance, compare quotes from at least three different companies to see which offers the best coverage for you.
Is it better to pay insurance in full or monthly?
The answer to this question, it depends on where you buy car insurance. While some insurers reward drivers for paid-up insurance with discounts, other companies charge fees to process monthly payments.
Before you buy a policy, always ask your insurer about its preferred payment method. Ask if monthly payments are available or if you earn a discount for choosing the paid-up insurance option.
For example, you can use a credit card for cheaper car insurance with most companies, no matter when you pay. You may also find that your current insurer only offers a small discount (5% or less), so it may not be worth the large payment upfront just to save a few dollars.
Remember, insurance companies are for-profit businesses. They want drivers to have fully paid-up policies because they receive a large lump sum of cash upfront that you may never use if you never file a claim.
Do not be distracted by discounts or bonuses until you know that the fully paid-up insurance option is the right one for your budget. Drivers can maintain cheaper car insurance rates overall by switching companies every few months. So, do your homework and compare car insurance quotes and discounts to guarantee you are paying the best price for coverage.
Start comparing car insurance here with our free quote tool below. Enter your ZIP code to find car insurance companies in your neighborhood and compare affordable paid-up insurance options for free.
Frequently Asked Questions About Fully Paid-Up Insurance
Keep reading to learn more about the fully paid up meaning in insurance:
#1 – Is insurance cheaper if your car is paid off?
Not always. Your car insurance rates will not dramatically decrease once you pay off your vehicle. However, you can lower your rates at your next renewal period by dropping any unnecessary coverages. You can also choose to raise your deductibles.
Lowering your coverage and raising your deductibles will decrease your rates, but you may end up paying more out of pocket after an accident. Before making any changes, shop around and compare quotes to find more affordable car insurance.
#2 – What are paid-up additions?
Paid-up additions refer to extra whole life insurance coverage you add to an existing policy and pay for with the policy’s dividends. The difference here is that life insurance paid-up additions are paid for by the whole life insurance policy, while car insurance still must be paid by the policyholder.
However, fully paid up still means you paid all of your premiums ahead of time and are no longer responsible for making payments.