When do I pay for car insurance?
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UPDATED: Mar 19, 2020
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- Car insurance companies offer annual and monthly payment plan options
- A deposit is usually required to bind a policy when you are a new customer
- Shopping around for the payment plan options that work best for you as a consumer can help your buying decision
The vast majority of people see the value in buying car insurance. Even those that do not see the value in it are required to purchase it in 48 out of 50 states. It is one thing to get quotes for car insurance and be ready to sign on, but it is a whole different thing to pay for the insurance itself.
What many consumers do not know is how and when they need to pay for their car insurance. This is an important piece of information that you may not get by running quotes from some of the big insurance companies out there. Having an understanding of this can help you make a sound decision on a policy and also help you budget for such policy as well.
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Typical Payment Plans
There are some standard car insurance payment plans that are usually available from many of the major insurance carriers out there. The first payment plan is known as the annual or one-time premium payment plan. With this plan, as soon as the policy goes into effect, you are expected to pay the full premium amount at that time. The benefit of this is that you now have your car insurance paid for over the course of the policy’s effective period, but it means more money that you have to come up with up-front.
The installment option is also usually available from the vast majority of insurance carriers.
This allows you to pay your car insurance premium over a series of two, three, four, five, or even more installments. The payments can typically be spread out monthly over the course of the policy’s effective period, meaning if you have a year-long insurance policy, you can spread out the premium over 12-months of payments.
A deposit is usually required upfront to have the policy go into effect when you are a new customer with an insurance carrier. The deposit that you are required to pay is going to vary depending on which carrier that you sign on with.
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Every Insurance Company is Different
What you always want to be aware of is that no two insurance companies are ever going to be exactly alike. Just like you shop for car insurance that gives you the most coverage for the least amount of premium, you also want to shop around to get a payment plan that meets your needs.
The payment plan options can impact your decision to buy insurance. You could have a great policy with a value premium, but it is only being offered on an annual payment plan.
Since you may not be comfortable putting out all of that money right away, this may not work for you. The policy that is a bit more expensive, but allows you to spread the premium out over 12-months may make more sense for your financial situation.
Ways to Complete Payments
Insurance companies are also going to offer different ways to actually send in payments for your car insurance policy.
Most are now allowing you to pay one-time online payments via a debit or a credit card, as well as with an online check. You can also usually set up automatic payments with many of the insurance carriers so that your premium is automatically paid periodically.
In the event that you still wish to send in your payments via mail or over the telephone, this is allowed by many of the insurance carriers still as well. Many are now pushing towards the paperless environment, but it is certainly not yet a requirement among many of them.
You want to have a car insurance policy with a payment plan that you are comfortable with. When you are comparing the different options that you have for car insurance, be aware of the payment plans being offered and choose what makes the most sense for you financially.
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