Do you have to pay a deposit for car insurance?
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UPDATED: Sep 24, 2021
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Paying for car insurance may seem unnecessary or even like you are throwing your money away. However, it is important to understand that car insurance helps to protect all drivers on the road, including you. Without car insurance, you would likely be unable to withstand many of the legal and financial ramifications of a major accident.
If you are having trouble paying your car insurance premium or have recently had your rates go up, consider using an online rate comparison tool. These tools make it quick and easy for drivers to compare rates and policies and help them to ensure they are receiving the best price available. Compare car insurance rates now by using our FREE tool above!
Do I have to pay a deposit for car insurance?
If you are a new driver or are switching car insurance companies you may be wondering if you need to put a deposit down on your car insurance policy. The answer depends on the company you choose.
Every company has their own policies regarding payments, deposits, and premiums.
Each company can vary widely in how they handle and require payments. However, in general, most car insurance companies will let you pay about 30 percent of the total six-month or annual premium, or the first month’s payment at the beginning of your policy. You always have the option of paying your entire premium every year or every six months. If you have poor credit, a poor payment history, or have had your license suspended, you may be required by your insurance company to pay your premium in full or put a larger deposit down.
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What determines the price of my auto insurance policy?
There are many different factors car insurance companies consider when quoting you a price on your premium. Not every car insurance company will consider the exact same factors or score them the same, however, here are several of the main factors:
- Where you live: Some areas of the country are more prone to having accidents, car thefts, and vandalism. In addition, some are more prone to natural disasters and have higher monetary limits when it comes to car accident lawsuits. If you live in any of these areas, you can expect to pay a higher premium.
- Where you park: If you park in an attached garage, you will likely pay a lower premium than someone who regularly parks their vehicle on the street, in covered parking, or in a detached garage. This is because placing your vehicle in an attached garage makes it more secure and less likely to be victimized by thieves or vandals. In a garage, your car is also less likely to suffer damage from the weather.
- How far you drive each day: Someone who has a short commute to work can expect to pay less than someone who has a longer drive to work. This is because the more you are on the road, the higher your chances of an accident are.
- The purpose of your car: If you own your car for leisure purposes only and are not driving it several times a week to work, you may pay less in premiums than someone who needs their vehicle for a full-time commute to work.
- Your credit history and score: Although it can come as a surprise to many drivers, your car insurance has the right to use your credit score and history when determining your premium. There are only a few states where this practice is not allowed. Not every car insurance company will utilize your credit history, however, if you have good or excellent credit you can expect to have a lower premium than someone with average or poor credit. If you want to see better rates, work on improving your credit. Although your credit score will not improve overnight, it can significantly help your rates in the future.
- Your age, gender, and marital status: On a whole, men are riskier drivers than women. They take more risks and are more likely to get a DUI. For these reasons, men can expect to pay higher premiums. However, married men will pay less than single men. The older and more experienced you are at driving, the more likely you will be to see your premium drop as you will be less of a risk to your insurance company.
- Type of car: Some cars are safer than others and include more safety features. If you have a car that is not as safe as others or is more expensive to replace or repair, you can expect to pay a higher premium.
- Your profession: With some car insurance companies, you will receive a better rate or even a discount if you are in a profession that is generally considered trustworthy. For example, nurses, police officers, and firefighters often pay lower premiums than other professions.
- Your driving and claims history: Perhaps one of the biggest factors in determining the price of your auto insurance policy is your driving and claims history. If you have gotten several tickets or been in several accidents or filed several claims in the last couple of years, you can expect to pay a higher premium. You may even be required to put down a deposit at the beginning of your policy. This is because you pose a bigger risk to the insurance company.
- Multi-vehicle or multi-policy: If you are insuring more than on vehicle on the same policy or have multiple insurance products from the same insurance carrier, such as home or life, you will likely see a reduced rate on your policy.
What if I omit information on my insurance application?
Although it may be tempting, you should never lie or purposefully omit information on your auto insurance application. It is likely that they will find out the truth. In most states, car insurance companies can cancel your policy within the first 60 days without providing you with a reason.
The most common reason for such a cancelation is that they have found out information you provided them with is false.
While obtaining and paying for car insurance can be a hassle at times, it is well worth it for the protection it provides you and your fellow motorists. Be sure to check with your auto insurance carrier to find out if there is anything you can do to lower your premium, such as applying for various discounts. To ensure you are paying the best available rates on your car insurance policy, use an online price comparison tool. Enter your zip code in our FREE tool below to compare car insurance rates now!