Where can I get no deposit car insurance?

No deposit auto insurance can be hard to find, but you can still get no deposit car insurance policies when you comparison shop online. You can look for companies that allow drivers to divide their payment schedules to minimize or eliminate the deposit payment. Compare multiple car insurance companies at once with our free tool below to find a provider that offers low or no-deposit insurance options.

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Tonya Sisler has a Bachelor’s Degree from the University of South Carolina in Journalism and has worked for 15+ years in management. She has also completed a proofreading certification and is currently a professional writer.

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Brad Larson has been in the insurance industry for more than a dozen years. He started out as a claims adjuster for a national carrier. He has since switched to the agency side of the business. Brad is licensed in all P&C lines.

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Reviewed by Brad Larsen
Licensed Auto Insurance Agent Brad Larsen

UPDATED: Apr 15, 2022

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Owning and maintaining a vehicle can be an expensive endeavor. One of the greatest costs associated with driving is car insurance. A car insurance policy often requires a large upfront payment, or deposit, in order to activate.

However, it is possible to get a car insurance policy with minimal or even no deposit. Enter your ZIP code now into the FREE box on this page and get tons of car insurance quotes near you!

In order to make an educated decision, it is important to understand what a car insurance deposit is and what it means for your policy. Read on to discover the ins and outs of car insurance deposits so that you can make the best choice when procuring your new auto insurance policy.

What No Deposit Car Insurance Really Means

There are dozens of types of car insurance, and just as many payment options for policies. Some policies are paid up front at the beginning of the term (for example, a year) and no further payments are due.

Other policies may be paid monthly, while still others are paid quarterly. What type of payment options is associated with the policy is a decision that is made between the insurance agency and the consumer.

When you sign up for a new auto insurance policy, you will be asked to make your first payment before the policy becomes active.

This is often called the deposit. However, this name can be misleading. It is important to note that the deposit is not a fee or a collateral payment. This payment goes directly towards the cost of your car insurance. This payment is legally required in order to activate your insurance policy.

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Why Insurers May Require a Car Insurance Deposit

Many consumers are put off by the requirement that a deposit be made in order to activate a new car insurance policy. However, this is actually not the car insurance company’s fault. Legally, payment must be made for the insurance agreement to be binding. The deposit ensures that the insurer will receive proper compensation for the policy.

It is easy to imagine that if individuals had no cause to make a claim on their car insurance policy all year, they may be hesitant to then pay a large fee for their premium at the end of the year. The auto insurance deposit protects both the insurer and the driver.

Besides making sure that the insurer is paid for the agreement, it also prevents the driver from being caught in a situation where they have an accident and they have not paid for their policy- in which case it may be viewed as inactive.

No Deposit Car Insurance Is Hard to Avoid

Some people object to the payment of a car insurance deposit because it appears to be a form of collateral. However, this is not actually true. As mentioned above, a car insurance deposit is really no more than your first payment.

When you make a car insurance deposit, you are simply paying in advance for the services rendered by the policy.

In fact, you may want to be suspicious of any car insurance agency that advertises no deposit car insurance. If you start your policy before making your first payment, you may have trouble having a claim processed. Your insurance policy could be voided by lack of deposit.

By law, your auto insurance policy is not considered binding if no payment, or deposit, has been made. Paying an auto insurance deposit should actually give consumers peace of mind that they are being protected. With that being said, however, there are still steps that you can take to ensure that you are getting the best possible deal on your car insurance deposit.

How to Get Low or No Deposit Car Insurance

There is no reason that you should have to pay an exorbitant deposit to activate a new car insurance policy. In fact, studies have shown that car insurers sometimes charge excessive amounts specifically to lower income and middle income individuals. Here are some tips to make sure that you are protected from overpaying.

Try to divide the payment schedule for your auto insurance into smaller periods of time. For example, if your policy is a year long, you may be able to make your car insurance payments quarterly, which would reduce the amount of your deposit by 75 percent.

If this is still too much, you can consider a plan that offers convenient monthly payment options. You may even be able to ask your insurer if you can make a smaller payment up front and then larger payments down the road.

It is important to note that many car insurance companies access your credit report and use information regarding your creditworthiness to determine how much your premium will be and how your plan will be structured. If you have good credit, the insurer may be more negotiable regarding your payment terms.

If your credit is poor, the insurance company is more likely to ask for a large deposit up front.

Being an educated consumer will help you in this regard. You should be on top of your current credit rating to make sure there are no surprises when you apply for your new policy. To get a free, once per year copy of your credit report, visit this website.

If you see inaccuracies or blemishes on your credit report, you will want to address them with the three major credit bureaus and have them changed or removed before you contact your auto insurer.

Because a deposit is legally required to activate your car insurance policy, it can be said that there is no way to get a no deposit auto insurance policy. Technically, this may be true. However, many consumers will turn to credit in a pinch to activate their car insurance policy without outlaying any cash.

By doing so, many consider themselves to be getting a no deposit policy because they are not paying anything out of pocket at the inception of the auto insurance policy. Some auto insurers will accept a credit card to pay your deposit or periodic payments.

If you choose to go this route, you may have four to six weeks before the payment is due on the card. This allows you to get your first month or so of car insurance without having put down a cash deposit. Of course, you are still bound to make the payment due on the credit card. However, this can be a last resort option for individuals who really need car insurance and are simply unable to pay the deposit up front in cash.

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Questions to Ask Your Insurer about Your Car Insurance Deposit

If you think that the initial deposit required by your car insurance provider is too high, you can negotiate with them to find an option that works for you. The payment may be high because the overall cost of the policy is excessive, or because the payment periods are not structured to your advantage.

Many insurers are willing to be flexible on both of these points in order to maintain your business. Having competitive quotes from other insurance companies is a great way to initiate a negotiation with your insurance company.

If another company offers you more competitive terms or rates, you can request that your current or preferred provider match them. Check with the Better Business Bureau or a consumer ratings board such as A. M. Best to find options for highly rated car insurance companies near you.

You can request that your insurer reduce your upfront deposit in favor of a larger payment later on. If you have good credit, your insurer may be willing to work with you on this request.

You should also ask your insurer what percentage of your deposit (and subsequent periodic payments) is applied directly to your premium. Sometimes, getting a lower deposit and lower payments can result in paying higher fees. Be sure to ask your insurer to break down your bill to illustrate the amount of your payment that goes towards your policy and the amount of your payment that goes towards administrative charges.

Finding the Right Car Insurance Provider for a Low or No Deposit Policy

The key to finding the best policy and the lowest deposit in an auto insurance company is to do your research up front. Don’t rely on just one company to provide a quote; instead, you should reach out to several to compare and contrast the available options, policies, and payments.

Remember that there is more to consider in choosing a car insurance company than just the amount of the initial deposit. You will want to carefully consider coverage options, payment terms, quality, service, and reputation before you choose an insurance partner.

Choosing a policy solely based on a low deposit might end up costing you a lot more in the long run, if your claims are denied or inefficiently handled.

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