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Car Insurance Payment Methods

Car Insurance Payment Methods

Paying for auto insurance is something that most drivers rarely look forward to, but it is a process that can provide certain advantages when done in various ways. Here, we’ll go over some common car insurance payment methods to consider.

Paying Your Premiums

Some of the most important payments you will make are your car insurance premiums. If you don't pay on time (or at all), you can face late fees and even cancellation of your policy. If your policy gets cancelled, you can face:

  • Harsh penalties for driving uninsured, such as fines, penalties, and driver’s license suspension.
  • Future rate increases. Having had your policy cancelled indicates to other companies that you present a higher risk, so they’ll charge you higher premiums.

Luckily, however, most car insurance companies offer a variety of payment options to make the process of paying on time simpler.

Payment Types

The payment options you have will largely depend on which company you choose for your car insurance policy. Generally speaking, some common types of payment options include:

  • In-person payments.
  • Phone payment.
  • Online payment options.
  • Payment via mobile apps.
  • Automatic payment setup.

After you figure out what payment options are available to you, it is important to choose the one that is conducive to paying your bill on time. While this may vary from month-to-month, you should consider each option individually. For instance, if you find yourself forgetting to pay the bill, setting up automatic payments may be the best option for you.

Alternatively, if you prefer to manually submit payment, but are constantly on the go, then the mobile or phone payment option may be better suited for you.

Payment Intervals

Another great way to make sure you can pay your car insurance bills on time and with ease is by setting up your ideal payment schedule.

In general terms, the more you pay upfront, the more money you save in the long run. At the same time, it is important to stay true to your budget, which means electing to set up billing cycles on intervals that are complimentary to your lifestyle.

Common payment schedules include:

  • Monthly payments.
    • Pros:
      • This billing schedule allows you to pay one lower payment each month instead of a higher, less frequent payment.
      • This is a good option if you rarely have large sums to pay at once.
    • Cons:
      • There are more opportunities to miss payments with monthly installments.
      • You may end up paying more money than if you pay in full at one time.
  • Annual payments.
    • Pros:
      • Yearly billing can help you avoid additional charges like installment fees.
      • This is a viable option for teachers and other professionals that receive the majority of their income during certain parts of the year.
      • You can save money by paying in a lump sum, as many companies provide discounts for paying in full.
      • You can rest easy knowing you’ll be insured for a full year and will not have to worry about missing payments or paying late fees.
    • Cons:
      • This payment method takes a larger chunk of your budget at once, so you’ll need to make sure you’ve got the funds to handle it.
  • Quarterly payments.
    • Pros:
      • It allows you to control your budget by making only 4 payments per year.
    • Cons:
      • You might end up forgetting about your payment if you don’t pay each month.
  • Semi-annual payments.
    • Pros:
      • You only have to pay twice per year so the likelihood of forgetting is minimal.
      • Since you’re not paying the entire amount up-front, it can be easier on your budget.
    • Cons:
      • You might end up paying a little more than if you paid all at once for the full year.

Choosing the Right Method for You

When you consider all of the car insurance payment methods available to you, it all comes down to which is best for your lifestyle and budget. You should see which policies offer discounts as well.

This includes any discounts you may receive for setting up automatic payments, choosing paperless statements, and/or paying your annual insurance cost a year in advance.

Ultimately, you want to find a payment method for your auto insurance that creates a balance between meeting personal preferences and saving you the most money while staying true to your budget.

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