Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years. He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like Reviews.com.

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Sara Routhier, Managing Editor and Outreach Director, has professional experience as an educator, SEO specialist, and content marketer. She has over five years of experience in the insurance industry. As a researcher, data nerd, writer, and editor she strives to curate educational, enlightening articles that provide you with the must-know facts and best-kept secrets within the overwhelming world o...

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Reviewed by Sara Routhier
Director of Outreach

UPDATED: Oct 30, 2020

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Auto Insurance Policy FeesIn some states, auto insurance companies are allowed to charge a policy fee. This is an amount charged when a customer requests a quote from an agent and is a one-time fee.

Other types of fees the insurer may add to your bill are surcharges and those related to returned or late payments, or for canceling your policy in before the term expires.

Be sure to compare insurance providers online using our free quote comparison tool so that you can find the cheapest auto insurance with the best coverage!

Extra Fees for Quotes

If an insurance company is trying to charge an extra fee for preparing a quote, the official explanation is likely that this money is used to offset the commission that an agent is paid when he or she makes a sale.

The insurance company may argue that preparing quotes for customers who don’t end up buying a policy is providing a service that it should be able to make money from.

As a consumer, you can counter that argument by saying that providing quotes is part of doing business. You have the option of contacting the insurance company directly to request a quote instead of dealing with an agent.

Another approach you can take to finding coverage is to ask up front if the insurance company routinely charges a fee for preparing a quote. If you are told that the company charges for this service, you can move on to one that doesn’t charge for it. Many online services charge no fees for quotes on car insurance.

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Other Fees Insurance Companies Charge

If you have been declared the at-fault driver in an accident or you have moving violations on your record, your car insurance company may add a surcharge onto your premium when your policy is up for renewal. The amount charged will be a set percentage of your premium. Insurance companies have adopted this strategy in an attempt to charge rates that are fair for drivers. A person who is being charged this type of extra fee can expect to pay more for his or her car insurance coverage for three premium cycles after the incident.

In a situation where you have written a check to your car insurance company for your coverage and it is returned because of insufficient funds, the insurer can charge you a fee. If the payment is late, the company can charge an extra fee. Insurance companies can also charge a separate fee if your policy was canceled for non-payment and then reinstated or if you choose to pay your premiums monthly.

An insurance policy is a contract with the company and if you decide that you want to cancel your coverage before the term of the contract expires, the company may charge you a fee for doing so. The usual practice is for the company to hold back 10 percent of the premium for the months remaining on the contract to help defray the costs of issuing the policy in the first place.

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How to Avoid Paying Fees

When you are shopping around for the best deal on your car insurance coverage, ask about any extra fees that are not included in the premium rate you have been shown. Even if you are told that charging a fee is the insurer’s standard practice, you can explain that you are not willing to pay it and ask the insurer to waive the fee. You can always decide to get your coverage from a different provider that doesn’t charge a policy fee.

If you want to avoid paying extra fees for the convenience of paying your insurance premium on a monthly basis, ask if you can pay for six or 12 months of protection at one time. By doing so, you are saving the insurance company from having to perform extra administrative duties and you get a break on the price you pay.

Keeping track of financial matters so that your insurance payments don’t get returned due to insufficient funds is another strategy you can use to avoid being charged extra fees on your coverage. If you are on a monthly withdrawal system and find the date you have chosen isn’t working for you, contact the insurance company to see if you can change it. You may be able to work out an arrangement that works better for your cash flow and save yourself the NSF fees.

Sticking with your insurance company until the term of your policy expires is another way to avoid paying extra fees. When you are ready to shop for car insurance, look for a company that does not charge a policy fee for working up a quote. A simple auto insurance rate quote tool will give you several options to choose from.

To compare rates from competing auto insurance providers right now just enter your zip to start!