Providing they have the money; this is one of the easiest car insurance discounts motorists can get since all they need to do is pay premiums in full upfront to save on average 9%, which isn’t a small amount for most people. Furthermore, they avoid paying installment arrangement or service fees that reduce costs another 2 – 3% in some cases. Besides, policyholders don’t need to worry about policy cancellations due to missed premiums once they settle the whole amount at the start.
Missed payments are an annoyance for vehicle insurance companies and many of them may actually not accept payment after several missed installments and decide to serve notice to cancel the policy. Upfront automobile insurance premium payments guarantees that the policy won’t be cancelled due to payment issues.
Also, policyholders are unlikely to shop around mid-term for cheaper coverage once they settle the full amount for vehicle insurance. It reduces administration as well. Overall, carriers like to get their money as quickly as possible and many of them don’t mind offering discounts to get it at the start.
Many companies clearly advertise this discount for paying car insurance premium in full on their websites including some of the large ones like Progressive, Travelers, Allstate, Farmers and American Family. Although they don’t say how much, they usually offer around 9% discount for quick payers. Auto-Owners and Erie are other two companies known to offer large savings for one off payment and Auto-Owners offer one of the largest discounts for it.
Unfortunately, some states like California and New York don’t allow auto insurers to use payment methods as a factor in premium calculations. Otherwise, motorists in nearly all states enjoy varying amounts of discounts for settling with their providers at the beginning.
Automobile insurance premiums are technically due at the start. However, nearly all companies offer installment plans to make it easier for policyholders. Nevertheless, many of them charge a fee or interest for spreading the premiums into several installments or monthly. For example, GEICO doesn’t offer a pay-in-full discount for car insurance but motorists still save money when they do so because they avoid paying GEICO installment fees.
It may actually work the other way around. Companies may have decided to offer quotes on the assumption that applicants will pay in installments and therefore build the costs in. Once people want to settle the full amount, they don’t need to pay the extra amount built-in hence the discount.
Companies work in different ways and under different assumptions when they calculate their quotes. Some may offer their best prices and charge additional fees for people who like to pay in installments and the others may have already included the fees in their quotes and so feel the need to offer discounts for people who pay car insurance premiums in full upfront.
In the same way, many companies offer discounts for setting up automatic funds transfers as well, although the savings may not be as much as making one payment.
That is why it is important to get a few quotes and not only compare the price but include the final amount after their payment method is taken into account. This will help in determining which auto insurer is actually the cheapest after all the calculations. And it can serve as an extra incentive when the quotes are pretty close to each other.
Some insurers may not actually offer other payment plans but full payment in some states and for certain types of policies. For example, it is a known practice that some companies want the premium upfront when an applicant wants to buy one of their basic policy offerings. This may be due to legal requirements to buy such policies, their low costs and wish to prevent cancellations and administration costs after.