Is car insurance paid a month in advance?

Paying car insurance a month in advance is standard for most car insurance companies. You have the option to pay 6-months or a year in advance and save up to $100 on your policy. Since car insurance is billed in advance then if you are willing to "pay ahead" for car insurance then you might just get the cheapest rates. Read this guide to determine how often you should pay your car insurance and then compare quotes to save!

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Zaneta Wood, Ed.S. has over 15 years of experience in research and technical writing bringing a keen understanding of data analysis and information synthesis to reach a wide variety of audiences. She studied adult education and instructional technology at Appalachian State...

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Joel Ohman is the CEO of a private equity backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses...

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Reviewed byJoel Ohman
Founder, CFP®https://res.cloudinary.com/quotellc/image/upload/insurance-site-images/ciccom-live/41b5e36b-joel-ohman.jpg

UPDATED: Jul 28, 2020

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Here's what you need to know...

  • You have to pay car insurance upfront (or pre-billed)
  • There are many car insurance payment options for insurance policies
  • An extra car insurance deposit may be required to start your policy
  • If you pay for car insurance a year in advance, you may save $50 to $100 a year
  • In the event of a policy cancellation, you will receive a refund

Is car insurance prepaid? How often do you pay car insurance premiums? In order to start a car insurance policy, a car insurance company must collect a premium. This is to ensure that your policy is up to date.

It is also so that in the event of a car insurance claim, the insurance company has some reserve from your payments to help with sharing the cost of the claim.

Read on to learn all about paying car insurance premiums for a month in advance, 6-months in advance, or the entire year in advance, and how car insurance is billed. Then be sure to compare car insurance quotes today by entering your ZIP code above.

Do you pay car insurance a month in advance?

Yes. When you purchase a car insurance policy, you pay your car insurance premium a month in advance. The next monthly payment begins on the same day for the next month.

Some car insurance companies will let you pay as much as you want at the beginning of the car insurance policy, which will lower your car insurance rates per month.

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Is it better to pay insurance in full or monthly?

There are many payment options for paying your auto insurance bill:

  • Full pay – You pay your policy in full for six months (or a year if the option is available). This form of payment usually gives you a large discount because the insurance company is guaranteed to get your payment
  • Electronic Funds Transfer (EFT) – which is also known as automatic withdrawal. This is when the insurance company takes your payment out of your checking, debit or credit card every month on the same day
  • Quarterly payments – This is a great option for those who do not like the hassle of paying every month but also do not have the funds to pay in full. There is usually little to no discount for this kind of payment plan
  • Monthly billing – This is a good option if you want to pay monthly but do not want an insurance company pulling from your account every month. There is no discount for this payment option because the insurance company cannot be certain you will pay your bill

Find out how much you can pay for car insurance by entering your ZIP code in the free comparison tool,

Will I have to make a down payment for car insurance?

In some cases, a deposit or down payment may be required to start a car insurance policy. Depending on the insurance company, your first payment could be between 25 and 50 percent down. You can also learn more about prepaid car insurance, which is a special kind of policy.

The most common cause for a large down payment is for first-time car insurance holders.

The good news is that after your first six months, you won’t need to pay another deposit as long as you pay your bill every month on time.

Another case where a large down payment might be required is if you’re driving without car insurance.

This is often called a lapse in car insurance. Depending on the length of the lapse, you are once again considered to be a first-time policyholder.

Your credit history is also a factor in whether or not you have to pay a deposit upfront. Here are the average annual rates based on credit history.

Average Annual Car Insurance Rates by Credit History
Credit HistoryCar Insurance Rates
Good$3,166/year
Fair$3,687/year
Poor$5,151/year
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The better your credit, the less you’ll pay for car insurance. Why is that? Car insurance companies correlate risk to your credit history. Therefore, customers with poor or fair credit pay more because the car insurance company views them as a higher risk.

Insurance companies use an insurance score to determine their rates and sometimes bad credit can have a negative impact on your insurance rate.

Compare car insurance rates from different car insurance companies in your local area by entering your ZIP code in the free comparison tool below.

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Do I get my money back if I cancel?

Even though your insurance is paid in advance, you are owed a refund in the event of a cancellation.

The refund is prorated and the amount you receive back is dependent on what day you cancel your policy.

Some companies have a cancellation fee so it is best to contact your company if ever you are thinking about canceling to find out if they assess a fee!

If you’ve just canceled your car insurance policy, you’ll need car insurance right away. Enter your ZIP code in the free comparison tool to find the cheapest car insurance in your local area.

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Compare Companies and Their Payment Options

It is important to compare different companies when choosing a car insurance company. Since you are giving the company your money in advance, you want to be sure you are making the right decision.

Many companies have many different options for payment and payment discounts.

Choosing the right company for you will make the difference in the amount you pay upfront so remember to choose wisely! Taking your time and compare at least three different companies before making a final decision for your car insurance needs.

Compare companies side-by-side to see how much you could save on car insurance.

Prepaid Car Insurance FAQ

For the final section of this guide, we’ll answer frequently asked questions that appear on popular search engines across the internet. Also, we’ll recap what you’ve learned from the guide.

Is car insurance prepaid or postpaid?

Usually, you can prepay your car insurance when your policy begins. Some car insurance companies will ask for a portion of the total cost of the policy. Postpaid car insurance is waiting until your first monthly payment is due, which payment the following month instead of payment on the day your policy starts.

Should I pay my car insurance in full or monthly?

The best option is the one that saves you the most money. Some car insurance customers prefer not to have monthly payments, so they pay their policy in full. If it’s more cost-efficient to pay every month, then choose the monthly payment option.

Is car insurance cheaper if the car is paid off?

That would depend on the company. For example, Geico, State Farm, and Progressive insurance have different car insurance rates based on the vehicle and whether you own it or finance it.

Is it cheaper to pay insurance in full?

It depends on the customer. A car insurance company may give you a discount if you pay your car insurance policy in full.

How can I find my car insurance?

On your billing statement, there should be a policy number or account number that’s connected to your car insurance policy. Contact your car insurance company and ask them what coverages are available under your car insurance policy.

Is it better to pay car insurance monthly or every 6 months?

Some car insurance policies only last six months. You have the option of paying the six months in full. You can also pay your car insurance policy every month if you think it’s safer for your finances to pay monthly.

When is the first car insurance payment due?

Your first monthly payment is due on the same day of the month as your original policy start date. For example, if your car insurance policy started on April 12th, your monthly payments are due on the 12th of each month.

Is health insurance paid in advance?

Yes. Whenever you start a health insurance policy, you will have to pay a month in advance. For example, health insurance in the year 2021 will start when you make an initial payment in December 2020.

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