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: Jul 14, 2021

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Almost all states have financial responsibility laws that mandate what type of car insurance you must carry and the minimum limits of coverage that must be on your policy when you own a car. If you fail to comply with the law, you face harsh penalties that will almost surely cost more than it would to simply buy a basic policy. This is why it is so important that you take the appropriate steps to ensure that your coverage is always paid and active. Start comparing car insurance rates now by using our FREE tool below!

Insurance companies offer a wide range of different options when it comes to paying for your car insurance premiums. Not only can you choose to pay by debit card, credit card, cash or check, you can also choose a payment schedule that is most convenient for you and best suits your budget. If you are wondering how often you will be required to pay your premiums or your installments, it all depends on the options that you choose. Read on, and learn more about how payment schedules work and which payment plan might work best for you.

Distinguishing Between 6-month and 12-month Insurance Policies

When you are comparing car insurance plans and shopping the rates, you will stumble across quotes for terms that last both 6 months and 12 months. Most insurance companies will offer either one or the other to consumers who are shopping for personal insurance.

It is up to you to understand how one minor difference can make such a drastic difference in costs.

A 6-month policy has a term that will last for 6 months rather than a year. This is important because the rates that you are quoted are only locked in for that 6-month term. If you have a loss, you are cited for a moving violation, or there is an issue that makes you ineligible for coverage, it will affect your premiums sooner rather than later. Policies that carry 12-month terms are guaranteed for twice the amount of time. This is beneficial for individuals who often deal with rate increases due to their driving habits or their accident record. Know the advantages of both terms before making a choice:

Advantages of 6-month Terms

  • You have an infraction that is close to dropping off of your record
  • You are contemplating shopping around for coverage in the near future
  • You can get a paid-in-full discount without paying for an annual premium

Advantages of 12-month Terms

  • Your rates will be guaranteed for 12 months once the policy is issued
  • You can pay one bill for the year if you pay in full
  • You will have peace of mind in knowing policy is paid up for the year
  • You can avoid lapses in payment by having less renewals
  • Less of a chance for you to fall victim to a rate increase

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Choosing the Best Payment Schedule

Once you decide on a term, you must then decide how often and how much you are willing to pay at a single time. Which options are available to you will depend upon the company that you do business with and also what your budget happens to be. Some individuals who are not living on a limited income may not have financial boundaries that affect their ability to pay either a 6-month or 12-month term in full. Others will be better off setting up a payment plan with different frequencies that fit your pay dates. Here are some of the most popular options available with leading insurers:

  • Pay-in-full Annually or Semi-Annually

If you pay the entire premium for the entire term at once, you are paying in full. This could either be an annual rate or semi-annual rate. Either way, most insurance companies will offer pay-in-full clients a discount because it reduces operation costs. You can also avoid the processing fees when make payments by phone or the billing fees for mailing out bills.

  • Quarterly Payment Schedule

If you cannot afford to pay the full premium but you do not want the responsibility of remembering to pay monthly, you can always pay quarterly. With quarterly payments, you will have a payment due every 3 months on the same day of the month. It helps you stay in budget but also makes payments more convenient.

  • Monthly Payment Plans

Many years ago standard and preferred companies did not even have monthly payment options. Now, with the high demand for monthly payments, most of the leading companies have an installment option. You may be required to pay a single month down or two months down. You may also be charged monthly fees on each bill or on each payment made. If you do pay a high down payment, you can skip a month when the policy term comes up. This is beneficial if you are trying to save up for a new policy or for your renewal.

There is not just one definitive answer as to how often and when you will pay car insurance. It is your duty to compare the companies first, the premiums second, and then the payment installment options. If you are interested in comparing premiums, you can use an Internet-based rating tool that will show you the premiums and then show you installment options. Start comparing car insurance rates now by entering your zip code in our FREE tool below! Once you do your price comparison, you can select a policy and make your payment for activation.