Do you get your deposit back from auto insurance?

Do you get your deposit back from auto insurance? Car insurance deposits are not refunded because they are used toward your payments. It's not lost though because it wasn't a traditional deposit and was applied to your total policy amount due.

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Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products including home, life, auto, and commercial and working directly with insurance customers to understand their needs. She has since used that knowledge in her more than ten years as a writer, largely in the insuranc...

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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, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like and Safeco. He reviews content, ensuring that ex...

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent

UPDATED: Oct 25, 2021

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Things to remember...

  • Some auto insurance companies charge their applicants an initial deposit when they submit their application
  • Do you get your deposit back from car insurance? Deposits are not refunded because they are used toward your payments
  • When you pay the down payment, your coverage will be activated right away while the application is underwritten
  • If the underwriter decides that you don’t qualify for insurance, you’ll get a portion of what you paid back
  • If you choose to cancel the policy before all of the rates have been earned, you’ll get a pro-rated refund

Insurance isn’t just something you buy; it’s something you have to apply for. You have to qualify for coverage through a personal auto insurance company before an agent will take your application.

If you provide information that indicates you don’t qualify for insurance, the agent will simply recommend that you solicit quotes from another carrier. If you do qualify, your application will be accepted and reviewed to verify what you indicated was accurate.

Not only do you have to provide a complete application to the insurer, but you’ll also have to provide payment for the coverage to take effect.

How much you’ll have to pay to bind your coverage depends on the carrier.

Are you asking “Can I get money back if I cancel my car insurance?” If you change your mind and cancel, you may be entitled to receive some or all of the money you paid back.

Shopping around is the best way to get the coverage you need at the cheapest price. Just enter your zip here to compare auto insurance quotes and save the money you need!

Auto Insurance Deposit Explained

As AAA notes, most states require auto insurance at some level. While there are thousands of companies across the US to meet those needs, each one has its own requirements, coverages, and rates. Some of those companies require a so-called deposit.

While many people call the initial payment that’s due when the policy takes effect a “deposit,” the money that you’re required to pay doesn’t really fit the definition of the term “deposit.” It’s more of a down payment for the coverage than a deposit.

Why do you have to pay a deposit on auto insurance?

When you’re making a deposit on something, you’re paying money upfront that will hold a product or that’s placed in your account and used to pay money when you’re late.

The money that’s due at the beginning of the term when you’re applying for insurance is simply your first payment and not an actual deposit in the usual sense.

So, when you pay a deposit for auto insurance, do you get it back? It’s not returned to you but you don’t lose it either. It’s applied to your payments.

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How much is the average down payment?

If you’re planning on paying your rates in full, you don’t have to worry about making a down payment. When you pay the full six-month rate or the full annual rate when you apply for your coverage, there won’t be a special minimum down payment that must be made to activate your policy while the application is being reviewed.

If you’re planning on setting up a car insurance payment arrangement so that you can make monthly or quarterly payments, you will have to submit an application that’s accompanied by a down payment. The amount that you’ll have to pay can vary.

Here are some of the common down payments that insurers charge:

  • The first two months must be paid when the policy takes effect
  • All monthly payments will be equal for the entire term
  • You’ll be asked to pay down a percentage of the entire policy rate

It is important to remember that this money will then be used towards your payments.

Let’s look at some average auto insurance rates so that you get an idea of what your down payment may be.

Average Annual Auto Insurance Rates By Coverage Type
CompaniesAverage Annual Auto Insurance Rates for High CoverageAverage Annual Auto Insurance Rates for Low CoverageAverage Annual Auto Insurance Rates for Medium Coverage
American Family$3,416.40$3,368.49$3,544.37
Liberty Mutual$6,356.04$5,805.75$6,058.57
State Farm$3,454.80$3,055.40$3,269.80

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The monthly average for these auto insurance coverages falls between $313 and $345, depending on the type of coverage. Your down payment would be figured similarly.

What happens after you submit your application and your first payment?

You can’t submit an application for coverage until after you’ve received quotes. After you have a quote and you know how much the coverage should cost you, the application is then accepted and sent to an underwriter.

Making a deposit doesn’t mean that your rates will be locked in. The carrier still has to completely underwrite your application.

When an application is being underwritten, a representative employed by the company will start to run reports and look for inconsistencies in the answers you’ve given. If the reports show something you haven’t reported or there are further questions, the underwriter could ask for clarification.

It’s not until all the information is verified that the final rate is determined and the policy is set to be issued.

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Policies Can Be Rescinded or Cancelled

If you know you have infractions or accidents and you purposefully don’t disclose them, the carrier could do more than just cancel your policy. It’s possible that the company will make the business decision to rescind your coverage. It’s not common, but it’s an option that exists in extreme circumstances.

If my auto insurance is canceled do I get a refund?

Rescinding policies is allowed when you’ve lied to the carrier or when you make fraudulent claims, meaning that the carrier dates the cancellation back to the policy’s effective date. No coverage is afforded, and ties are severed.

So do you get a refund if your insurance is canceled by the insurance company?

Whatever you’ve paid into the policy will be refunded to you by check within a few days.

Can you cancel your policy if the rates change?

If you failed to list an old ticket and it was an innocent mistake, your policy won’t automatically be canceled. The carrier still might offer you coverage, but you’ll have to pay more than the amount that was estimated at first.

After you receive the final rate quote, you’ll get an invoice for the prorated increase that you need to pay to keep up your coverage.

Can I cancel my auto insurance if I pay monthly?

If you’re not happy with the jump in your final rate, you do have the option to cancel the coverage. The cancellation won’t be backdated because coverage was afforded at first.

It can, however, take effect on the date that you contact the insurer. Most of the time the company will request you to ask for the cancellation in writing so there’s a record of it.

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If I cancel my auto insurance, will I get a refund?

If you do cancel the policy before your next installment is due, you’re entitled to get some of your down payment back. The money that’s taken as a down payment is still used to bring your balance down.

Since it goes towards rates and not other application fees, there will be money left over that would have paid the unearned rates.

Does Geico refund if you cancel? Does Travelers insurance issue refund checks? It is relatively easy to receive an auto insurance refund. Geico, for example, allows you to cancel your policy over the phone and will give you information about your refund at the same time.

Your auto insurance reimbursement can come in different ways. Insurance refund checks can be mailed or you may be able to get your balance deposited back into your bank account. The check will reflect the amount left from the pro-rated auto insurance policy.

Will there be a fee to cancel?

No fee is charged if the carrier initiates the cancellation. If you voluntarily decide to cancel your policy before the term is up, you could be charged a fee. Some fees are only a few dollars, while others are a percentage of the balance owed on the total rate.

It’s very important to provide accurate information on your applications.

If you’re dishonest, it will catch up to you and can cost you more money in the long run.

Don’t just accept a rate increase without shopping around. Use our online quoting tool so you can see if the final rate is reasonable and what deposit may be required. To use our online quoting tool to compare multiple auto insurance quotes, simply enter your ZIP code now!

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