Since car insurance is mandatory in nearly every state, it’s a bill you don’t want to fall behind on. Otherwise, your policy may get canceled for nonpayment and cause a lapse in coverage. You could face state fines if caught driving without insurance, hefty bills if there’s an accident, and even seizure of your car or suspension of your license. Getting insurance after a coverage lapse can also be costlier.
To help you stay current, many insurance companies offer a variety of payment plans. This way, you can decide whether it makes more sense for you to pay for the entire policy all at once or break the premium up into smaller payments.
But which option should you choose? Let’s look at the most common plans and payment methods so you can decide which one is best for you.
How Often Do You Pay for Car Insurance?
As you work with your insurance agent to get car insurance, ask how long your policy is for. Typically, you’ll need to renew your plan every six to 12 months.
However, you don’t usually need to pay for your entire policy all at once. For instance, you can pay in two installments (paying half each time) or make monthly payments with Nationwide. GEICO allows you to select from multiple installment options, including a single, full payment, or two to six installments. Your insurance agent can tell you which payment options are available for your policy, or you’ll see your options listed when purchasing a policy online.
How often you pay your car insurance can affect how much you have to pay, as some companies offer discounts if you pay the entire amount in full.
Even if your car insurer doesn’t offer a paid-in-full discount, you may wind up paying more if you decide to pay for your policy at time intervals. Some insurers charge an installment fee each time you make a payment, which can add up.
Should I Pay My Car Insurance in Full?
There are some benefits to paying your car insurance in full. Besides potentially receiving a discount and avoiding installment fees, you also won’t have to worry about paying the bill again until it’s time to renew your policy. This means you won’t forget to make a payment and pay late fees or have your policy canceled.
The downside is that you need to come up with the entire premium upfront. While your car insurance price depends on many factors, the average liability-only insurance with Progressive, for instance, generally ranges from $466 to $877 for a six-month term, depending on where you live. This may not work with your budget, so paying over time might be the way to go.
Common payment terms are monthly, quarterly, or semiannually. Many insurance companies allow you to pick the payment plan that works best for you. You may even be able to change your plan partway through the policy if your situation changes.
Paying your bill in full isn’t usually required. However, there are situations when it might be. For instance, insurers in some states may require you to pay 100% of your premium upfront if you’ve had your policy canceled for nonpayment in the past.
Ways to Autopay Your Insurance
Many insurers provide autopay options to make paying your car insurance simple. When you set up an autopay plan, the payment is automatically transferred on the right day.
Most insurers will accept autopay transfers from a variety of sources:
- Electronic Funds Transfer (EFT)
- Credit card
- Debit card
- Online bill pay from your bank
Typically, there are no service fees associated with the EFT option when you set it up through your insurance company. However, there may be a small service fee if you set up automatic payments with your credit or debit card. If you decide to use your bank’s online bill pay, there usually aren’t any fees, unless you opt for a rush payment.
No matter which system you use, understand the fees so you aren’t caught by surprise.
If you make changes to your bank or get a new credit card, make sure to notify your insurer and update any autopay settings. You might be able to do this online if you have access to your account. This way, you won’t miss a payment and have your policy canceled.
Making Manual Payments
You’ll need to make manual payments if you decide not to enroll in autopay. Typical options include:
- Paying by check
- Paying with a credit card over the phone
- Using the company’s app to make a payment
Since your payments won’t automatically go through each month, remembering to make payments on time is crucial. Otherwise, you risk having your policy canceled for nonpayment.
To help remember, consider setting a reminder on your phone, writing the payment date on your calendar, or using a reminder service such as Memo To Me.
The Bottom Line
You need to pay your premiums to keep your car insurance policy active. While you can often get a discount for paying in full, a payment plan might fit better in your budget. Once you select your plan, decide how you’ll pay. No matter which payment method you pick, send your payment in on time to keep you from losing your insurance.