The Different Ways to Pay for Auto Insurance – Guest Post
Most car owners are required to buy auto insurance, and they have several options when it comes to how to pay for their vehicle coverage. People may, depending on their insurer and state laws, choose to pay for a six-month or annual policy in full or in installments on a monthly, quarterly, or six-month basis. Each of these methods has distinct advantages and drawbacks that could end up impacting the overall price of a plan, so it’s important for motorists to explore their choices before settling on a payment option.
When buying coverage, people usually have the option of paying for their plans in one of several ways. In Texas, for example, drivers are entitled by law to pay for coverage in installments. The state’s Consumer Bill of Rights says that a 12-month policy can be broken up into at least 10 equal installments and that a 6-month policy can be broken up into at least 4 equal installments. Making monthly installments can allow policyholders to evenly distribute the overall cost of their vehicle protection and potentially allow for the purchase of an insurance policy that would have been unaffordable otherwise.
Although helpful, each installment may be accompanied by a billing or transaction fee. Information provided by Massachusetts regulators show flat fees for non-electronic payments from insurers in that state can range from $0 to $8, and some insurers there charge a certain percentage of the outstanding premium as the billing fee. These fees may seem insignificant, but they add to the overall price of a protection plan over time. To avoid many of these additional charges, motorists may want to consider adopting a longer billing cycle. Some insurers, though, do not charge any fee if the payment is made electronically.
One hazard that policyholders should acknowledge when going the installment route with their auto insurance is the possibility of missing a payment. Insurers in many states are not required to offer any grace periods for late or absent installments. This may mean that a policyholder who fails to pay a bill on time can have coverage canceled.
Owning an automobile that is uninsured, even for a brief amount of time, could result in numerous fines and reinstatement fees. In most states, such as New York, a lapse in coverage could lead to driver’s license and vehicle registration suspension, in addition to fees for having these documents reinstated. Insurance providers are often required by law to maintain electronically updated coverage records at all times, making it simple for these companies to notify the proper authorities the moment that a motor vehicle becomes uninsured.
To avoid potential consequences from being uninsured, drivers may want to consider paying for the policy in full. If motorists are able to find auto insurance that can be purchased in one large payment, they should strongly consider making the investment. Apart from significantly reducing installment fees and cutting the possibility of experiencing a lapse in coverage, many insurers also provide special discounts for people who pay for auto protection in full. Although drivers experience greater up-front costs, the overall savings are often significant.
A decade-long fire and casualty broker, Cesar Diaz applied his experience to launch Online Auto Insurance, LLC to bring free, fast, unbiased auto insurance quote comparisons to consumers.