Rachael Brennan has been working in the insurance industry since 2006 when she began working as a licensed insurance representative for 21st Century Insurance, during which time she earned her Property and Casualty license in all 50 states. After several years she expanded her insurance expertise, earning her license in Health and AD&D insurance as well. She has worked for small health insuran...

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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 Chris Harrigan

UPDATED: Aug 9, 2021

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Key takeaways...

  • When you buy insurance, you’ll have to pay the entire policy premium throughout the term that you choose
  • The term is the policy period where your coverage is bound and your insurer can’t change your policy class
  • You don’t have to pay the entire premium up front
  • If you have a six-month auto insurance policy, you can pay quarterly to pay half of your premium
  • If you have a 12-month auto insurance policy, you’ll select a semi-annual payment option to pay half of your policy

Paying your car insurance bills on time is a must. When your insurer bills you, you have to pay that invoice by the due date on the bill or you’re at risk of losing your coverage. Just one day of driving uninsured could change your financial future for years.

This is why all insurance consumers need to budget all of their recurring expenses before they choose an installment option. You have plenty of payment options from monthly payments to paying 6 months or a year at once. Some people also choose to pay half up front and then make monthly payments.

Keep in mind, you’re not locked into the payment plan you choose initially. If you go on a monthly plan and decide you want to pay more one month or pay early, there’s no penalty as long as you don’t miss a payment.

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Every insurance company is different. There are carriers with extremely flexible payment options and others that only offer the traditional option to pay in full. Some even choose to use usage-based auto insurance. This means you pay based on how much you drive, which means your premium can change month to month. In this case, you could make estimated payments, but you’d have to pay the difference if you went over after the fact.

If you’d like to pay a large portion of your premium but you can’t pay it all at once, here’s what you need to know:

Do you pay your premiums up front or after you get the coverage?


Insurance is a financial contract. It’s something you sign up for before you need the protection. While you are buying protection while you’re driving on the road, you’re only paying for a service until you actually need to file a claim.

If you didn’t get billed before the insurer started to cover you, you could cancel your coverage and choose not to pay. You should always make sure you have other coverage to replace it if you’re going to cancel. You should also make sure to contact your insurance company to formally cancel. If you just stop making payments, you could accrue late fees and other penalties. It also doesn’t look good if you decide to switch insurance later on.

Most service contracts are billed after the service is rendered simply because the carrier doesn’t know how much to charge you until the billing period is over. This isn’t how your auto insurance works.

When you’re paying for the service afforded by your personal car insurer, your premiums will be paid upfront.

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How are your premiums split up?

The only way that your insurer is able to charge you upfront for the premiums you’re using during your term is for the company to calculate a total premium. When you first apply for coverage, you get a quote that estimates your premium.

Then, after you apply, you’ll get new paperwork showing your final policy rate.

The final policy rate after the policy is issued is what’s used to split up your insurance payments. You can either pay the final rate in full or the carrier will divide that figure by the total number of days the coverage is afforded. You choose your payment distribution when you sign up for your policy.

If you buy a six-month policy, the carrier will divide the premium by 182 days. If you buy a 12-month policy, the total premium will be divided by 365 days.

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Selecting the Right Installment Plan

Now that you know how premiums are broken up to bill you in advance, the next step is to select an installment plan. There are several different payment plans that you can choose that are dictated by the term you’re carrying.

Here are some of the payment plans that you’ll be able to choose from when you’re buying insurance:

  • Monthly installments
  • Monthly EFT payments drafted from your account each month
  • Five-pay plan where you skip a month at the end of your six-month term
  • Quarterly installments billed once every three months
  • Semi-annual installments billed once every six months
  • Annual premiums billed in full upfront

Which installment do you choose to pay half?


You can choose from one of to installment options when you want to pay the total premium in half. You need to look at your quote or your policy declarations page first to see what term you’re carrying. You will either have a standard six-month term or a 12-month term.

If you’re carrying an annual term, you’ll ask your agent to set up a semi-annual installment plan. When you do this, you’ll pay the first six months first and then you’ll be billed the next installment six months from the effective date.

Your installments will consist of a daily charge for 182 days.

If you’re carrying a six-month term, you’ll ask your agent to set up a quarterly installment plan. This means you’ll pay once every three months. The first payment is due at the effect date and then the next payment will be due three months later.

Your payments will be for the premium charge for 91 days of coverage.

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What is the benefit of paying for half of your premiums?

Paying for half of your premiums can reduce how much you pay for billing fees. You’ll only pay one fee instead of a fee every month. You can also reduce the likelihood of missing a payment, which would lead to a lapse of coverage and penalties.

Make sure you always check what the installment options are when you’re buying coverage.

If you are shopping for coverage, start to get insurance quotes now. Use our online quoting tool to get multiple quotes instead of calling agents directly.

This will help you get instant quotes in a minimal amount of time.


  1. https://www.insurance.ca.gov/01-consumers/105-type/9-compare-prem/
  2. https://www.helpinsure.com/auto/autoglossary.html
  3. http://insurance.mo.gov/consumers/auto/autobuy/tips.php
  4. https://www.dfs.ny.gov/consumer/faqs/faqs_auto.htm
  5. https://www.thebalance.com/best-ways-to-make-your-car-insurance-payment-527399
  6. https://www.myjourneytomillions.com/articles/paying-car-insurance-full-really-worth-savings/
  7. https://www.consumer-action.org/index.php/alerts/articles/insurance_premium_installment_fees