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Can I pay my car insurance quarterly?

The lowdown...
  • Car insurance policies sold by standard auto insurance companies come in 6-month or 12-month terms
  • The term that you select doesn’t always dictate how often you’ll pay unless you’re paying premiums in full
  • Check to see if the insurance company offers the option to pay in installments before you buy an auto policy
  • The two most common installment options available to pay insurance premiums are monthly EFT and quarterly
  • If you pay your premiums quarterly, you’ll make a payment on the same day of the month every three months

There’s no way to get out of paying auto insurance premiums when you own a car.

As long as you live in a state where auto insurance is mandatory, you’re legally required to purchase insurance as soon as you become the registered owner of a personal vehicle. Unfortunately for many consumers, paying policy premiums in full from the onset isn’t an option.

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You must pay your insurance for the policy to provide coverage but most companies offer their customers the option to pay their premiums in installments.

If you are one of the consumers who would prefer to split up your payments so that you can budget wisely, here’s what you need to know about setting up a payment plan to pay premiums in increments.

Understand the Insuring Agreement

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Auto insurance carriers enter into contracts with policyholders. The entire contract is written around the insuring agreement.

The insuring agreement basically says that the insurer will pay for all of the covered losses laid out in the contract as long as you pay your premiums. If you don’t pay premiums, the insurer isn’t obligated to pay out benefits.

Are premiums paid in advance or in arrears?

Some of the time, a company will charge you after you’ve used their service so that they can bill you accurately for usage.

This is a billing method that’s called paying in arrears. If you don’t pay the balance of your contract by the due date, the service will cancel and then you can be taken to collections for the past due balance owed.

Auto insurance premiums aren’t charged in arrears. You must pay for your premiums that are due before the coverage is afforded.

This is why you have to pay money to start a new policy. It’s also the reason that you have to pay for some or all of your renewal premiums by the date of your renewal or the policy will expire.

Do you have to pay for your policy premiums in full?

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In the past, there were insurers that would only accept the full premium when selling six-month and 12-month policies. This means that you’d have to pay $500 to $2,000 all at once just to abide by the law. Luckily, most carriers accepted credit card payments at this time.

Now, more and more consumers have a need to pay premiums in installments instead of paying all at once.

This is why most of the leading carriers in the marketplace allow their customers to pay just part of the premiums to start with. Then, everything else that’s due can be split up into installments.

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What type of installment options are available?

Some carriers have more flexible bill options than others. If you’d prefer to pay your premiums once every month, that’s typically an option available to you.

There’s also the option to allow the carrier to automatically draft your payments directly from your checking account each month so that you don’t have to remember to make your payments. Here are some of the most common options:

  • Monthly
  • 5-Pay (one month with no payment)
  • Monthly EFT
  • Quarterly
  • Quarterly EFT
  • Semi-annual

How does a quarterly payment plan work?

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One of the drawbacks of paying for your premiums monthly is that you have to remember to make your payments each and every month. This is why paying quarterly is becoming an increasingly better option. It can even save you money because you won’t be billed the installment fees 12 times per year.

When you choose this installment option, your payment is due every three months starting from the effective date of the policy.

With most carriers, the installments that you’re billed will be due on the same day of the month. Some carriers will set up an automatic EFT payment for you that draws once every quarter.

What happens if you’re late paying your premiums?

Being late paying your premiums can put you at risk of driving without insurance. Some carriers are more generous than others.

These carriers will give their consumers extra time to submit their payment before the premiums are due. This period of time is called a grace period. It can range between 1 day and 30 days in length.

As you’re shopping for auto insurance, it’s important that you compare companies and their billing systems. Do your homework to find out which companies offer you the option to pay quarterly before you start to shop.

Once you find out where that’s an option, you can proceed to get quotes. Use an online rate comparison tool to get your instant quotes, and see how much you’ll quarterly payments will be through multiple carriers.

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