Car Insurance Monthly. Paying for car insurance on a monthly basis can have some benefits. It means that rather than paying your insurance premiums once or twice a year, you can spread out the cost in smaller monthly amounts. If you’re on a limited budget, this can be one way of making your auto insurance payments more manageable.
For drivers in high-risk categories, such as after one or more accidents, or after a DUI conviction, paying yearly or every six months may be very expensive, due to high premium rates. In this case, a lump-sum payment may be difficult, and a monthly payment plan can help.
Paying monthly can also be a convenient option for auto insurance, with an automatic deduction from your credit card or bank account each month. It may make it easier to stick with a budget if you know the same amount is coming out each month at a given time.
As a clarification, insurance contracts are usually not offered on a month-to-month basis. They are usually written for a three, six, or 12 month period of coverage. When you’re paying monthly, you’re just spreading out the cost of the contract over smaller payments. You’re still obligated for the time span of the contract.
How to find Monthly Car Insurance
There are many options available for car insurance coverage, so it pays to shop around. You can begin your search online with websites such as Esurance, which will give you the rates of different companies, or you can go directly to the insurance companies for a quote. Finding a good local agent may be the best way to compare your options for affordable coverage. Be sure to get quotes for various levels of coverage, and to compare several companies because rates can vary widely.
Hidden Costs of Monthly Car Insurance
While it’s convenient, there are also some reasons why it may not be your best option to spread out your car insurance payments by paying monthly. In the US, many insurance companies charge you a service fee for the privilege of paying monthly. You may be paying $36 to $60 more a year in extra fees just for monthly billing. Plus, you will probably have to have a month’s payment in reserve with your insurance company in case you miss a payment.
To save some money and avoid paying the monthly service fees, you may want to figure out how much your six or twelve month policy would cost each month, and set aside that amount in a savings or money market account where you won’t have easy access to it. Then, when it comes time to pay your premiums, you’ll have the money to do so. It does require some discipline, but you may save up to $50 a year on your car insurance, and that can add up.
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