Your auto insurance policy can typically be paid each month—either when you make the payment or via automatic withdrawals—or in a lump sum at the beginning of your term.

If you opt for monthly payments:

You’ll pay the first month plus a down payment up front and the remainder will be spread evenly across the rest of the year

If you pay semi-annually or annually:

You’ll pay the entire policy period up front, which often results in a small discount on your total cost

4 things to consider when choosing your payment plan

When deciding how to pay for your car insurance premium, there are a few key things to consider:

Installment fees: If you choose to pay monthly, your car insurance company will likely add a small fee that will increase the overall cost of your policy

Potential savings: Opting for an annual payment upfront might reduce your rate since most insurance providers offer a discount for this

Your billing preferences: Choose a plan that aligns with your cash flow and budget, and make sure you will be able to maintain the payments for the duration of the policy to avoid any lapse in coverage

Whether you’ll switch providers: If you’re considering shopping around for a better rate mid-term, choosing a monthly plan could offer more flexibility

The pros and cons of paying your car insurance in advance

Pros

Potential discount for paying in full

No installment fees

No need to remember monthly payments

Cons

Requires a lump sum once per year or every six months—more difficult to budget

Less financial flexibility to change your plan mid-term

Refund could take longer if you switch providers mid-term

Penalties for missing a car insurance payment

Missed or late payments can have serious repercussions, including late fees, policy cancellation, and a

lapse in insurance coverage

. Paying your car insurance premium in advance helps mitigate the risk of missing a payment.

If you opt for monthly billing but think you might have trouble remembering your payment date, consider setting up autopay with your provider so that the payment is withdrawn from your bank account or credit card automatically.

If you’re using

Jerry

, you can also enable payment reminders to be notified three days before your next payment is due.

4 ways to make your insurance payment more affordable

If you’re having trouble making your monthly payments or feel like you might be overpaying for your car insurance policy, there are a few things you can do to help reduce the costs.

Compare quotes: You can shop around for a better rate at any time during your policy period or before renewal. Aim to

compare car insurance quotes

from at least 3-5 providers to make sure you’re getting the best deal. Jerry can help you do this in just a couple of minutes.

Consider discounts: All insurers offer

car insurance discounts

, including popular ones for bundling policies and being accident-free.

Practice safe driving: You’ll get the best rates if you have a clean driving record with no accidents, tickets, or violations.

Increase your deductibles: Raising your comprehensive and collision deductibles can lower your rate—but make sure you’re still able to pay them if you need to file a claim.

Learn more:

How is car insurance calculated?

FAQs

Is car insurance paid upfront?

Typically, car insurance can be paid upfront for the entire policy period or in monthly installments.

Why do auto insurance companies make you pay upfront?

Upfront payments guarantee the insurer receives the full auto insurance premium, reducing their risk and administrative costs. Most insurance companies give you the option of paying monthly, though.

How does insurance payment work?

Payment plans vary, but generally, you can choose to pay your premium monthly, semi-annually, or annually. You can make the payments each time or sign up for automatic payments with your insurance company. Most insurers accept payment methods including debit card, credit card, and electronic funds transfer.

Is monthly car insurance paid in advance?

Yes, monthly premiums are typically paid at the start of each month for that month’s coverage.

What happens if you don't pay the premium?

Non-payment can lead to policy cancellation, coverage lapses, and potentially higher premiums in the future.

What is the average monthly insurance payment?

This varies widely based on factors like location, vehicle, and driver profile. According to Jerry’s data, the national average for minimum coverage is $1,526 while the average for full coverage is $2,265.

Can you make monthly payments for car insurance?

Yes, most insurers offer the option to pay your premium in monthly installments.

What are the pros and cons of paying insurance upfront?

Pros of paying insurance upfront include potential savings and convenience, but it means you must have a lump sum and can make mid-term cancelation a little trickier.