Car Insurance Monthly Payments

The standard payment plan for car insurance is paying twice a year, every six months, for the forthcoming half year period. Many people dread this looming expense, and for good reason – having valid auto insurance isn’t a luxury or a glamorous accessory, it’s a legal requirement in the United States, and increasingly throughout the world. A new trend has arisen lately, given the economic climate of the last few years, in which insurance companies are letting drivers make much smaller car insurance monthly payments instead of larger lump sums twice a year.

This is much better for drivers who are used to making regular monthly payments for things, but have difficulty through various circumstances (work schedules, other bills, medical costs, unemployment) in making large payments less frequently. There are fees associated with getting on a monthly payment plan for car insurance, but overall for high risk drivers, or for those with strange payment schedules, this new system will work out in their favor. It also makes it easier to keep track of your finances to have a regular lower monthly payment.

Some people wonder whether they will end up paying more for car insurance after renting a car or borrowing a friend’s car. The thing to note is that car insurance “follows the car” as it were – if you drive something that isn’t your personal vehicle, your existing coverage carries over, and renting a car won’t increase your monthly premiums.

If you’ve gotten onto a monthly payment plan for car insurance and your premiums are still too high, you should make sure and check whether or not you’re getting more coverage than you require. Many people don’t know how much coverage their state has legislated as the minimum, and are driving around paying for more insurance than they are likely to use.

Another way to lower your month to month car insurance bills is to drive less and start using other modes of transportation more, like biking, trains, or buses. People living in rural or suburban areas don’t really have this option, but those living in cities can often save quite a bit by using public transportation. The biggest problem with that, though, is that you have to keep to the public schedule instead of having the freedom to come and go as you please. It may be a small price to pay, though, to keep insured when you need to use your car.

Installment payment plans are really useful for people who cannot or do not want to pay the entire insurance premium all at once, most often twice a year. Typically the period is 6 months, with a payment due as soon as you accept the policy, in order to begin coverage, and then another payment halfway through the 6 month period. The alternative is to make smaller payments each month over the life of the policy. While you do pay extra for this convenience of paying each month, the typical fees are low – roughly $2-5 for each payment. All in all your policy ends up costing $12-25 more than it would have if you had made payments less frequently.

One thing that people need to be aware of if they are on a monthly car insurance payment plan, is that there are more opportunities to miss a payment. Sure each payment is lower in size, but now that you are making more of them over the term of the insurance policy, the same penalties for missing payments apply – your policy will be canceled and the state in which you live and drive will be notified. You will be driving on expired car insurance until you work something out with your insurer and make a payment, and get back in good standing. The penalties for driving without valid insurance are very severe, and if you’re already in financial difficulties, an additional hefty fine will only make things worse. Be sure and keep up with your payments so if you get stopped by a police officer, or (knock on wood!) get into an accident, you are not caught without valid insurance. Many states have made it a criminal offense not to have a valid active policy – so if you drive there is no reason to let your’s lapse just because your payments are smaller does not make them any less important.