Can I pay off my car insurance early?

Auto insurance payments are always made in advance of the policy period. You can start paying for the next term once the policy is up for renewal.

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Mathew B. Sims is Editor-in-Chief and has authored, edited, and contributed to several books. He has been working in the insurance industry ensuring content is accurate for consumers who are searching for the best policies and rates...

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years (BBB A+). He is licensed as an agent to write property and casualty insurance...

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Reviewed byDaniel Walker
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UPDATED: Apr 20, 2020

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Things to remember...

  • Your car insurance premiums will be billed either once every six months or once every year
  • You have the choice to pay the policy in full or to set up payment arrangements so you can pay installments
  • If you’re paying in monthly installments, you can pay more than what’s due but must pay at least the minimum
  • If you have extra money to pay off some of your bills, you do have the option to pay off the balance of your policy
  • Early payments can be made by managing your car insurance policy through a company’s app or website
  • You can’t pay for coverage past the end of your current term if the upcoming renewal hasn’t been run yet

When you apply for insurance, you’re agreeing to pay your premiums in exchange for financial protection after you have a covered loss. If you don’t pay the premiums, the insurer you’re doing business with isn’t obligated to pay out your benefits.

That’s why it’s best that you pay as much as you can early on so that you don’t miss a payment.

Many people aren’t in a financial situation where they can pay their full policy premium all at once. Fortunately, there are payment options that will work for most customers.

If you can’t pay a six-month premium, paying a monthly installment might be a better option. Then, if your financial situation changes, you have the option to pay off the balance on your account early.

If you are looking for better auto insurance rates, start comparison shopping today by entering your ZIP code above!

Do you have to pay your policy in full when you apply for insurance?

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All insurance companies have their own rules. Some carriers prefer to do business with clients who will pay their policy in full.

Paying in full saves the insurer money to collect premiums all at once because operations don’t have to be focused on accounts receivables. When clients pay their premiums upfront, they’re also unlikely to cancel before the term is up.

Just because full payments benefit the carrier doesn’t mean that’s all the average carrier will accept. Only allowing clients to pay in full would limit the company’s client base.

Auto insurance carriers will offer payment installment plans, while some carriers will push for their customers to pay in full by offering a discount.

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What are insurance premium installments?

There are a few different payment plan options that you can select if you’re not in a position to pay your first bill off all at once. In the industry, it’s standard for companies to allow their customers to pay:

  • Monthly
  • Quarterly
  • Semiannually

If you pay premiums in monthly installments, the total premium will be divided into either six or 12 equal amounts.

Some carriers will collect more upfront and then divide the remaining amount into the remaining installments. If you pay quarterly, there will be four equal installments due every three months.

Can you pay the policy off early if you have an installment plan set up?

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If you select an installment plan, you’ll need to organize your finances so that you can submit your payments by the due date.

Knowing the due date is crucial. If there’s no grace period, your policy will cancel if you’re just one day late submitting your payment.

Sometimes, when you work overtime and you save money elsewhere on a bill, you might have more money in your pocket to cover your recurring bills. To relieve yourself of the burden of paying all of the installments on time, you can pay off the balance of your policy.

Check your last invoice and look at the premium balance instead of looking at the current amount due so that you can submit your payment.

Can you pay for coverage past the expiration date on your ID cards?

Your auto insurance ID cards or your declarations page will show you when the current policy expires.

When you make a payment to pay off the balance of your current term, you’ll have coverage until the expiration. You can’t pay past the expiration date on your documents because the new term could have a new rate.

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Can you pay your policy off early if the renewal has run?

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A renewal is run when a policy is about to expire. As the term nears an end, the carrier will start to process the upcoming renewal.

A renewal happens about 30 days before the next term will begin. The insurer will run reports, check your claims records, and decide if you qualify for coverage still. You’ll receive a new renewal bill in the mail afterward.

You can’t pay off your insurance early until the renewal has been run.

If the renewal has been run and you have gotten the paperwork in the mail, you can pay off the current balance and the upcoming invoice all at once. You will then have paid the carrier until the end of your next term which will last for either six months or 12 months.

You can pay your insurance with:

  • Cash
  • Credit
  • Check

Make sure that you keep track of your due dates so that you aren’t stuck without any coverage on the open road.

If you’re tired of making regular payments each month, pay off your insurance. If you don’t want to stay with your current insurer, start getting quotes online and see if you can afford to pay a new insurance policy in full.

If you don’t want to stay with your current insurer, start getting quotes online and see if you can afford to pay a new insurance policy in full.

Try our FREE online quote tool to compare auto insurance rates! Enter your ZIP code below to get started!

References:

  1. https://www.thebalance.com/what-is-an-insurance-renewal-527419
  2. http://www.consumer-action.org/index.php/alerts/articles/insurance_premium_installment_fees
  3. http://www.myjourneytomillions.com/articles/paying-car-insurance-full-really-worth-savings/
  4. http://www.investopedia.com/terms/i/insurance-grace-period.asp
  5. https://www.irmi.com/online/insurance-glossary/terms/d/declarations.aspx
  6. http://www.kbb.com/car-advice/articles/five-things-you-might-not-know-about-car-insurance/

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