There are so many saving opportunities that motorists may ignore or may not be aware of some of them. One of the least known car insurance discounts is offered by some companies for simply setting up electronic funds transfer (EFT) to settle premium installments automatically. Once arranged, the money transferred from your account to the provider’s bank seamlessly.
Vehicle insurers love to receive the whole premium upfront and they offer larger discounts for it. The next best thing is to set up an automatic premium payment plan, which hardly requires any administration. It is a set up and forget arrangement. Although their accountants most certainly tally up the numbers, providers don’t need to keep an eye on the installments.
They are informed only when the payment is missed somehow in cases where the bank account was closed, there weren’t enough funds in it or the direct payment arrangement was cancelled by the policyholder. It is a convenient facility for both parties. They can receive regular premium payments from a checking account and debit or credit card.
Auto pay also allows automobile insurance companies to renew policies automatically and therefore it is a great tool for customer retention. Actually, some companies may urge (or even insist) their policyholders set up auto-pay for car insurance premiums. If you are likely to set it up anyway, why not find out if you could actually get a discount for it.
A few companies clearly advertise on their websites that they offer discounts to policyholders even if they pay in installments as long as they set up Electronic Funds Transfer. Companies and agents may use different terms for it like direct debit, direct transfer or automatic payment but they all refer to the same thing in most cases. For example, American Family uses the term Autopay.
Allstate, Progressive, Farmers, Travelers, American Family and Liberty Mutual are some of the large carriers offering 3 – 5% discounts for setting up automatic vehicle insurance premium payment plans. Mercury, Freeway and Direct Auto are some of the smaller companies with the offer. There are many other providers who aren’t listed here. Also, other companies may have different incentives and one of discounts.
This saving may not be available in a handful of states and vary from one company to the other in size and conditions. That is why motorists are advised to check but only after getting several quotes. There is no point in going through a detailed search to find a company offering automatic payment discount for car insurance and realize that they are expensive and a small premium reduction will not put them back in the mix of competitive companies.
If you are a good driver who qualifies for great rates, you may not worry much about small discounts. However, high-risk motorists who are young or have recent at-fault claims face really high premiums in thousands of dollars. If they could save even 5% it would mean $100 – $200 back in their pocket.
The beauty of saving money because you set up automatic premium payments for car insurance is that you get to spread the premiums. You may get almost double the savings for paying in full but not many people can afford to do that. It reduces administration for you as well and you don’t miss an installment for forgetting to send in the check or similar reasons other than not having money in your bank account. You will have to pay the premiums anyway so why not use the chance to reduce the amount.
Again, it is best not to chase the discounts as a starting point in your vehicle insurance shopping process. This would lead to false belief that certain companies will be cheaper because they are offering more discounts than others. However, motorists should always look at the final price because a company, which appears to be not offering many discounts, can actually end up the one offering the lowest quote.