Jessica Sautter is a Content Writer for CarInsuranceCompanies.com with a Bachelor’s Degree from Eastern Michigan University in Elementary Education with a Major in Reading and a Minor in Mathematics.

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Chris Harrigan has an economic degree from Limestone College and an MBA from Clemson University. He previously managed auto insurance claims for Enterprise Rent-A-Car. Currently, he is using his business and insurance expertise to provide insurance data analysis and visualizations to enhance the user experience.

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Reviewed by Chris Harrigan
Former Auto Insurance Claims Manager

UPDATED: Sep 19, 2020

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Key takeaways...

  • Buying car insurance should be thought of as initiating a contract: you promise to pay a premium and, contractually, the car insurance company offers to cover you in case of an emergency or accident
  • Companies typically offer a small amount of monthly savings for paying in advance, as it lowers the risk of non-payment and means they won’t have to pay for processing an individual payment each month
  • Liability insurance is mandatory in all fifty states and will no cover damage was done to the car or medically-treatable injuries incurred by the driver
  • Online comparison shopping is an excellent choice for most people and will present the best price from each insurance agency, but those with special needs should always contact an agent, or agents, near them

Buying car insurance should be thought of as initiating a contract: you promise to pay a premium and, contractually, the car insurance company offers to cover you in case of an emergency or accident.

Because of this structure, an insurance buyer will always have to provide payment up front for at least one month of coverage. Compare the best car insurance companies for FREE by entering your ZIP code in our free quote tool above!

An insurance company’s premium can be thought of as the contractual offer of protection, or the offer of help in an emergency. A customer’s payment of that premium is an inherent acceptance of the insurance contract.

However, there are options for consumers who are working within budgetary constraints and are looking to pay the minimum amount up front for coverage.

Table of Contents

Month-to-Month Insurance Premiums

Many insurance companies are looking for immediate down payments of either three or six months in advance when enrolling a new customer into their plans. This is where the term “down payment” comes from, as it must be paid to initiate service.

Companies typically offer a small amount of monthly savings for paying in advance, as it lowers the risk of non-payment and means they won’t have to pay for processing an individual payment each month.

However, many consumers find themselves in tough economic times that have made such down payments impossible within the confines of their budgets.

In response to this, insurance companies like Safe Auto, Geico, and Progressive have allowed most consumers to pay month-to-month.

This option must be selected at the time of signing up, and may cause consumers to incur a small additional fee for payment processing each month, but it will drastically reduce the amount of money required up front for protection.

Additionally, companies like Safe Auto, which are designed specifically for cash-strapped consumers, allow some customers to post-date checks up to seven days in advance.

That means coverage can be secured, and a check sent while waiting for payday funds to deposit.

This option is traditionally only available to consumers who call their insurance company or speak with an agent, rather than use online comparison tools.

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Credit Worthiness

Another way to circumvent the traditional down payment of three or six months on an insurance policy is to apply with an excellent credit rating.

Insurance is primarily based on risk and premiums take many kinds of risk into account: the risk of an accident occurring, the risk a driver’s age places on the vehicle, and the risk that the driver may fail to pay their insurance policy and cause even greater headaches for insurance companies and other drivers.

Car insurance companies check credit reports, so make sure you are taking care of your credit cards.  A high credit score at the time of application reduces your financial risk in the eyes of an insurance provider.

It means an insurance company will be more inclined to offer a month-to-month plan at a lower rate than they would if your credit score were low and presented a troubling financial situation.

Choosing the Type of Coverage

Car insurance, like other types of insurance, comes as part of a tiered system of car insurance coverage. The lowest level, liability insurance, is commonly called “minimum coverage.”

Liability insurance is mandatory in all fifty states and will no cover damage was done to the car or medically-treatable injuries incurred by the driver.

Liability insurance simply spares a driver from paying the other person’s medical and repair bills.

It is, however, quite a bit more affordable than comprehensive coverage and this disparity in price means that cash-strapped consumers will face a significantly lower down payment, even if for just one month than they would with comprehensive coverage.

It’s important to remember, however, that these cheaper monthly premiums come at a cost when choosing liability insurance, and one wrong move behind the wheel could result in thousands of dollars of medical and repair bills that would be far worse to endure than a slightly higher down payment or monthly rate.

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Comparison Shop

The best way to ensure that a company is charging you the lowest amount possible for the level of coverage you’d prefer to purchase is to compare car insurance.

Thanks to the internet, this process is now much easier than the old-fashioned way of meeting with agents, getting quotes, and discussing the fine details in person.

Comparison shopping online will gather rates from all of the major providers that are eligible to serve your state and present you with a list of prices, fees, coverage levels, and other information that will help you make an informed decision.

Of course, there is still something to be said for interaction with a fellow human being, and an insurance agent or representative may be able to assist in the case of a unique situation or budgetary constraint.

Online comparison shopping is an excellent choice for most people and will present the best price from each insurance agency, but those with special needs should always contact an agent, or agents, near them.

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Compare Rates, Prices, and Savings

Finally, it’s important to note that paying insurance premiums on a month-to-month basis with a minimal down payment is only more affordable in the near-term.

As mentioned earlier, insurance companies typically charge a fee to process monthly payments and may add on additional fees to the monthly price if they feel a consumer is a financial risk.

If at all possible, it is best to pay in advance and save a considerable amount of money, sometimes hundreds of dollars per year, depending on coverage level.

Insurance companies accept credit cards in addition to debit cards and checks, and this may help cover the initial cost of buying insurance.

However, if there is absolutely no other option available when shopping for car insurance, rest assured that month-to-month plans are available, affordable, and provide the same standard of coverage as any of the more expensive options that require larger up-front payments.

Compare car insurance quotes for FREE and save money today! Enter your ZIP in our free quote tool below and start comparing rates now! 

References:

  1. http://money.cnn.com/pf/money-essentials-car-insurance/index.html
  2. https://www.iii.org/article/what-determines-price-my-auto-insurance-policy
  3. https://www.consumerreports.org/cro/car-insurance/credit-scores-affect-auto-insurance-rates/index.htm
  4. https://www.goodfinancialcents.com/best-auto-insurance-companies/
  5. https://www.iii.org/article/nine-ways-to-lower-your-auto-insurance-costs