When you buy your auto insurance you will often be given the option of paying your premium in several ways. For example, with many insurance companies, you can make a deposit and pay in installments, pay in monthly installments, or pay in full. While a monthly option may be easier on your budget, there are benefits to paying your insurance premium in full.
To lower your annual costs, maintain consistent insurance, and get rid of the headache of additional bills, you might consider paying for your insurance in advance once or twice a year.
Benefits of paying your insurance in full
1. Bills will not accumulate. Once your Rebuilt insurance is paid in full, you don’t have to worry about getting another bill. You don’t risk not paying on time, which can potentially void your coverage, lead to higher costs, and even damage your credit score.
2. You do not risk a cancellation. Since there is no risk of missing a payment, there is also no risk of your insurance company canceling your policy. It is essentially “guaranteed” insurance for the period of 6 or 12 months.
3. You will pay less during the year. Some insurance companies offer a “pay in full” discount, so they will actually reward you for paying upfront.
Even if the insurer doesn’t explicitly offer this discount, you’ll save a lot on your total costs by paying upfront.
4. Your premiums will not increase during this period. If you pay upfront, your insurance company won’t be able to increase your monthly costs, even if you file a claim. Basically, you’ll get a “fixed” rate for the 6 or 12-month period, since you’ve paid for each month’s coverage.
This is especially helpful for auto insurance regarding young or inexperienced drivers or those with many accidents and traffic violations.
What are the disadvantages of paying in advance?
The downside of paying upfront is that it’s more difficult to change insurance providers if you move out of state or want to compare quotes. It is possible to cancel your insurance if you paid in full, but it may take a while to get your money back.
Even though you can save money over the year by paying upfront, it can still be a decent financial burden to pay for everything all at once. But there are ways to minimize this initial cost to save even more money on your annual cost. Start by asking your insurance agent what discounts are available to you.
Comprehensive coverage includes a number of different policies that, when put together, provide a substantial package of insurance coverage that includes the following:
- State Minimum Liability
- No-fault insurance coverage
Essentially, this covers damage caused by collision, accident, vandalism, theft, and other types of damage that were not caused by an accident. However, it is important that you read the fine print because there may be certain types of damage that are not covered.
What coverage is right for me?
To find the best coverage for your needs, first look at all the available policy options and then compare what the comprehensive coverage offers for your vehicle.
In addition, you should pay attention to:
- The fair market value of your car
- Where do you live
- your budget
You may find that full coverage auto insurance is not suitable or perhaps too expensive for your means. When you start with the basics and work your way up to other policies you may or may not use, you can find the right balance between the right coverage that meets most, if not all, of your needs and a price that fits your budget.