Most companies offer several ways to make your premium payments. Many people start a policy and choose to pay monthly for convenience and never reconsider their payment options. However, paying yearly may yield savings.
Providers will typically slash your total cost by paying your premiums for the year upfront. Also, some providers will allow you to pay for your remaining premiums mid-policy term to receive pro-rated savings. Bottom line: check with your providers for ways to save.
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Why pay yearly?
The biggest benefit of paying yearly is the savings. Car insurance companies like when you pay ahead for such a long period because it guarantees that they will get their money and that you won’t lapse on your coverage.
While some companies offer a small percentage discount, some companies offer discounts up to 20 percent off your premium. By paying yearly, you can also avoid pesky installment fees. Plus, you’re locked in at a rate that is guaranteed not to change over a 12-month period.
Another benefit to paying yearly is peace of mind. Once you pay, you don’t have to remember to pay a monthly payment on time or have to worry about any late payments.
An annual payment is a great alternative, especially for those who have trouble keeping up with monthly payments.
What are my other options?
While paying yearly is a great option for some, it can be more difficult for others. Because you are paying for an entire year up front, you will be paying a large lump sum, which could easily be thousands of dollars. Whether you can comfortably afford a 12-month option or not should be based on your lifestyle and spending habits.
Luckily, most companies offer other payment options — which provides you with more flexibility. Besides the 12-month option is the six-month, paid-in-full policy, which can be advantageous if you want to evaluate your policy needs over time.
Splitting up the payment over six months is not as big of a financial impact when comparing it with the 12-month option.
The monthly option is one of the most popular policy terms among motorists. Even though the monthly option is more expensive in the long run, the monthly payment is more manageable on a short-term basis.
Another advantage of opting for a monthly payment, is you have the ability to be more flexible in your options. If you want to switch to another insurance company, you can do it almost at the drop of a hat.
What kind of insurance do I need?
Whether you have yearly, semi-annual, or monthly payments, the price tag on your payment also depends on what kind of coverage you opt for.
Although each state is different, you can expect to have liability insurance requirement. Liability insurance is set in place to protect you in an accident. There are two types of liability insurance:
- Bodily Injury Liability – Covers the cost of injuries to the other party in the event that you cause an accident. This could include costs resulting from emergency aid at the scene, hospital bills, loss of income, and even funeral costs.
- Property Damage Liability – Covers the cost of damage to someone else’s vehicle or property that you are responsible for damaging in an accident.
It is important to note that liability insurance does not cover damages to you or your property in an accident, which is why it is important to discover other types of insurance that may be beneficial to your needs. Some other insurances include:
Once you decide on what types of insurance and the limits of protection you need, then you can get quotes for yearly, monthly or semi-annual insurance.
If you are currently paying a monthly payment, but you know you can afford a one-time yearly payment, check out your options and see what discounts may apply to you.
Getting multiple quotes online will help you find the best deals. Enter your zip code in our FREE comparison tool below!