Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products including home, life, auto, and commercial and working directly with insurance customers to understand their needs. She has since used that knowledge in her more than ten years as a writer, largely in the insurance...

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UPDATED: Sep 13, 2021

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Important facts to know...

Paying your auto insurance on-time is just as important as buying auto insurance. If you don’t pay your insurance consistently, your policy will lapse and you’ll be in the same position as if you never bought coverage in the first place.

It is important to not only keep track of your due dates but also to make your payments on time in order to keep your costs low.

Not everyone is interested in paying their insurance every month. For some people, insurance falls into the category of services that just aren’t a priority. Setting up monthly installments could be the cause for major issues if you’re not very good at keeping up with your bills.

Unfortunately, not everyone is able to pay for their entire premium all at once because of all of their other financial obligations. If the average costs seem high, it may be because you’re not looking into all of the options.

Looking for affordable auto insurance rates? Start comparison shopping by using our FREE online quote tool. Enter your ZIP code above!

How much do you have to pay to activate your auto insurance?

You can’t activate a car insurance policy without making a payment.

If you want to apply for a policy, the chance is that the carrier is going to collect a payment from you to bind the coverage. The good news there is that most providers take multiple forms of payment, and various ways in which you can make those payments.

How much you have to pay depends on the carrier you’re applying through and if you want to break your payments up into installments.

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What does it mean when you pay your car insurance in installments?

When you get a quote for insurance, the agent or system will estimate how much you’ll pay over the entire term to carry the coverage options that you’ve selected.

In addition to the policy premium estimate, you can ask how much you’ll pay if you were to pay your premiums on a schedule.

Establishing all this information is referred to as an installment plan in the insurance industry.

Is your only option to pay a monthly installment?

Some consumers assume that the only installment that you can choose from is a monthly option. While paying monthly is undoubtedly the most popular installment option, it’s not the only one available through most insurers. Because companies want to end up with high ratings, they understand it’s in their best interest to offer options. It’s a consumer based market; if they don’t have choices their potential customers can shop elsewhere.

Many companies offer flexible installment options that will suit the needs of any consumer.

Here are some of the common options:

  • 5 Pay – pay two months upfront and then skip your last month
  • Monthly EFT – automatically deduct a monthly installment from your bank account
  • Quarterly – pay every three months (due on the same day of the month)
  • Semi-annually – pay every six months (only available for 12-month terms)
  • Annually – pay your entire premium at once (only available for 12-month terms)

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How often will your bill be due if you pay half?

If you’ve reviewed your total policy premium and you think it’s best that you pay half of the premium to start, you won’t have a payment due the next month after the policy takes effect.

When your policy is going to be due is dependent entirely on the length of the term that you’re carrying.

In most states, insurance companies that sell personal car insurance will sell either six-month or annual policies.

There are a few areas where only six-month policies are accepted because they benefit the consumer.

When you pay for half of your six-month policy upfront, you’ll be billed for the remaining half in three months.

When you pay for your annual policy in half, your second semi-annual payment will be due six months after the first.

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What payment methods are accepted?

If you’re trying to budget for your payment, you need to know what methods of payment the insurer accepts.

In the past, some carriers wouldn’t even accept credit card payments. But the competitive grid of companies has increased, leading to more changes in the way things are handled, especially where money is concerned.

Nowadays, since many people like to pay insurance by credit to get the rewards through their issuer, credit is a common form of payment.

Here are the most common options:

  • Credit/Debit
  • Cash (when there is a local office)
  • Personal check
  • Online check
  • Electronic Funds Transfer
  • Money order

What is a benefit of paying half of your premiums at once?

No one likes to have a bill looming over their head each month. Just like with any other sort of bills, be it medical costs or otherwise, knowing you owe money for something as important as your car and car insurance can add anxiety to our already full plates.

If you’re in a position where you don’t need to break your premiums up into six or 12 payments, it’s better for you to pay half of your premiums.

Paying half means there’s less of a chance for you to miss a monthly payment that leads to the termination of your contract.

Another benefit of paying half of your total premium is that you can also save money. Many insurance companies charge their clients who are paying their installments a fee each time they print a bill.

When there’s a fee for each installment, paying just twice each term can reduce your total insurance expense.

How much is an installment fee?

Installment fees can be fixed but they can also fluctuate. Some companies will charge you $5 to $10 each time you’re billed.

Others will charge you one to five percent of your balance in the form of an installment fee.

Check with your insurer.

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Is it better to pay your premiums on your credit card?

If you pay with a credit card and you have a low score, it could help you build your credit. Make your premium payment with your card and then pay it off soon after.

You can also get mileage awards and other incentives if you have a rewards card.

You need to take the time to choose the right payment schedule. Look at all of your other bills, write down your paycheck schedule, and then decide which payment makes the sense.

Get instant auto insurance quotes online, see how much you’ll have to pay to pay half of the premium, and then bind your coverage.

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