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: Apr 13, 2022

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Here's what you need to know...

  • Your auto insurance premium is the rate that you pay for the term of your insurance policy. Typically, auto insurance policies are sold in either six or 12-month terms
  • You may arrange for the payment of your premium to either be in one lump payment at the beginning of your policy term
  • Another option is to arrange for monthly or intermittent payments. The payment options available to you will depend on your specific auto insurance policy

In general, the term of your auto insurance coverage is either for six months or one year. The reason that some companies use six-month policy terms is that it allows for greater flexibility for them in your rate adjustment in the event of an accident or claim under your policy.

You can arrange for a specific payment plan with your auto insurance company if you do not decide to pay it in one lump sum at the beginning of your policy term.

Compare policies for free now! Enter your zip code in the tool above.

The Importance of Paying Your Auto Insurance Premiums On Time


Given that almost every state requires drivers to maintain a certain amount of basic auto liability coverage, it is important that you do not have a lapse in coverage.

One of the ways that this could happen is if you do not pay your auto insurance premiums on time and you receive a cancellation notice from your auto insurance policy.

The non-payment of auto insurance premiums is one of the primary reasons that your auto insurance company could cancel your coverage.

If this happens, you need to make arrangements right away to get the adequate coverage through another auto insurance company in your state.

Another way that an auto insurance company could drop you is to elect not to renew your policy. In general, you would receive notice of this decision near the end of your policy term. Again, it is important to act quickly to secure coverage from another auto insurance company.

If your coverage happens to be canceled as a result of your failure to make payments on time, this could mean that you will have to pay a higher rate for your next auto insurance policy. It is one of the factors that determines your auto insurance premium.

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Methods of Paying Your Auto Insurance Premium

Your auto insurance company will likely have multiple ways available for you to pay your auto insurance policy. The most popular options are:

  • By check in the mail
  • Over the phone
  • Online through your account

If you have questions about how to pay your auto insurance premium, do not wait until the day of the due date to try to figure it out. It may be too late to take care of at that point, and you may face a late fee or penalty from some auto insurance companies.

The best point of contact for questions about your specific policy and the payment options available to you is your auto insurance agent.

Determining Your Auto Insurance Premium


While you may be able to get a slight discount or avoid small fees from your auto insurance company by paying your policy premium in one lump sum, this will not have a significant effect on your auto insurance premium.

There are many more influential factors that come into play when an auto insurance company gives you a quote for an auto insurance premium.

Every auto insurance company considers these factors differently, which is why it is important to shop around for the best quote. If you have a bad driving record but great credit score, different companies will likely quote different rates.

First of all, your driving record is likely the most important factor in determining what your premium for auto insurance will be. There is often a three-year look back period regarding accidents and claims that auto insurance companies take into account regarding your driving record.

In addition to your driving record, almost every auto insurance company will take a look at your credit score in quoting you for an auto insurance policy.

A poor credit score is interpreted as you being a higher risk driver to insure. If you are looking to lower the cost of your auto insurance premium, then working to improve your credit score is a good step in the right direction.

Another major factor that comes into play for your auto insurance premium is the other drivers that live with you in your household.

As the general rule of thumb, the auto insurance will ask you to list other drivers who live with you. If they have a poor driving record or credit score, this could bump up the auto insurance premium that you will have to pay.

If they are not specifically excluded by you from your policy, the auto insurance company will assume that they are permitted to drive your vehicle.

In sum, you can negotiate directly with your auto insurance company on how you would like to pay your premium.

Typically, it is either paid at the beginning of your policy term or in monthly installment payments, although you may be able to work out an arrangement specifically for your circumstances.

The most important thing is to make sure that you do not miss a premium payment and do not have a lapse in your required auto insurance coverage.

Make sure you’re getting the best coverage for your money. Enter your zip code below to begin comparing insurance companies for free!