Should I pay my auto insurance in full?

Drivers with spotty records are often required to pay more up front. If your driving record is clean, you might earn a 10% discount for full payment.

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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 22, 2020

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Things to Remember...

  • Under normal circumstances, the average driver with a clean record will not be required to pay for car insurance in full, upfront
  • There are occasions when a court may require a driver to pay for his insurance in full before a car can be registered, such as a driver having a history of insurance lapses because of missed payment
  • Auto insurance policies are a contract between driver and insurance company. Therefore, any breach of the contract by the driver is grounds for termination by the insurance company
  • As a general rule paid-in-full auto insurance is cheaper simply because you’re not paying the extra convenience charges normally assessed on installments

Sometimes acquiring auto insurance can be confusing, especially when it comes to things like deciding when the insured has to have a paid-in-full auto insurance policy. That’s because payment plans and options vary from one auto insurance company to the next.

Not only that, but courts can impose certain restrictions on drivers who have a history of insurance-related difficulties.

Rest assured that if you’re a good driver with no history of insurance lapses, and you are insured with a reputable company, you’ll be able to select from a variety of payment options which include monthly installments, bi-monthly installments, or even paid-in-full.

If you switch insurance providers to a less reputable company, some of those options may be restricted. You’ll need to check with your individual insurance provider for details.

If you don’t have coverage already, start looking by using our FREE online tool above!

What if I’m an average driver with a clean record?

Under normal circumstances, the average driver with a clean record will not be required to pay for car insurance in full, upfront. You’ll be able to make monthly payments or other regular installments according to an agreement reached by you and your insurance provider.

But you need to know that most insurance companies charge a small fee for the added convenience of paying with installments. If you pay in full at the time of your renewal you will avoid those fees.

Whether or not your insurance provider offers you several payment options will depend primarily on two factors:

  • History of Payments The first one is your history of making your premium payments on time. If you have a history of repeated late payments, or policy cancellations because of missed payments, you’ll probably have fewer payment options available to you.
  • Credit Score The second thing the insurance company looks at, and this is true for especially for new customers, is your credit rating. A poor credit rating increases the chances that you’ll have to pay for insurance in full, upfront.

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Will a court ever require a paid-in-full policy?

There are occasions when a court may require a driver to pay for his insurance in full before a car can be registered. When this is the case it’s usually due to the driver having a history of insurance lapses because of a missed payment.

Sometimes this condition is also imposed on drivers with DWI/DUI convictions or some other serious infraction, like leaving the scene of an accident.

In such cases, drivers are generally put into a high-risk driver pool which carries with it some of the highest insurance rates in the industry.

If a court orders a paid-in-full policy there are generally two options for satisfying the requirement:

  • Pay the Premium The first option is to literally pay the entire premium for your auto insurance policy at the time the policy is issued. The insurance company issues you a receipt and informs the court that the policy has been paid.
  • Get an SR22 The other option is to get an SR22, which is simply a statement verifying you have the financial resources to pay your policy. The SR22 is filed on your behalf by your insurance company as a means of guaranteeing you’ll always have auto insurance.

If I pay my policy in full can it still be canceled?

Auto insurance policies are a contract between driver and insurance company. Therefore, any breach of the contract by the driver is grounds for termination by the insurance company. A paid-in-full policy is not a guarantee that your auto insurance can’t be canceled.

If for example, you are convicted of leaving the scene of the accident, your insurance company has the right to terminate your policy.

If your insurance company does it take this course of action, they must refund the amount of money equal to the number of days remaining in the policy period.

For example, if the amount of your car insurance breaks down to five dollars a day, and there are 30 days left on your policy when it’s canceled, your insurance company would reimburse you $150.

They are allowed by law to deduct from your refund any fees or charges related to the cancellation.

Is a paid in full policy cheaper?

As a general rule paid-in-full auto insurance is cheaper simply because you’re not paying the extra convenience charges normally assessed on installments.

But it’s also the case that some car insurance companies apply extra discounts for customers who will pay in full. These discounts can add up to be pretty significant over decades of driving, so if you can afford it may be worth your while.

Whether you are paying in full or using installments, enter your zip code below in our free online auto insurance quotes here!

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