Auto insurance companies allow their clients to pay for coverage in different ways. For example, you can pay your cover upfront or opt for monthly installments. You can set up automatic payments or process the premium payments manually every time. Each of these payment methods has its pros and cons.
Below are the top factors to consider to determine the best way to pay for your insurance.
Your Financial Situation
Two aspects of your finances determine the best way to pay your car insurance premiums. The first is your income's regularity, and the second is your savings. For example, you can opt for monthly payments with a regular income or adequate savings. You can set up automatic payments or regularly transfer the funds (for example, by check) to your insurance company.
However, you should not take that route if you have irregular income and lack adequate savings. Otherwise, you might miss an installment if the end comes and you don't have adequate funds to cover the payment. In such a case, consider alternative arrangements, such as annual, semiannual, or quarterly payments.
Your History of Bill Settlements
As mentioned above, regular payments do not have to be automatic. You can manually send your insurance company money every time. However, this option is inadvisable if:
- You are forgetful
- You have a history of defaulting on bills
- You lack good budgeting skills
You might forget to plan for your car insurance payments and default. Therefore, you should consider either automatic or upfront payments.
Car insurance companies offer dozens of discounts to their clients every year. You might not know about all the discounts if you don't ask because the insurance companies rarely advertise all of them. Some of the discounts depend on your premium payment method. For example, you may enjoy:
- Paperless discounts if you pay your premiums electronically
- Upfront pay discount if you pay the entire premium at once instead of making monthly payments
- Automatic pay discount if you set up automatic payments so that you don't have to process your insurances bills every month
The discounts vary by amount and the insurance company. Consider the discounts available and set up your payments to maximize the discounts. For example, you can save and make an upfront payment if your insurance company offers a sizable upfront pay discount.
Car insurance varies a lot by company. Contact your car insurance agent to understand the payment methods.