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...

  • There are factors that can dictate whether or not upfront premium is required on an insurance policy
  • Most of the major insurance carriers will require one month’s worth of premium upfront
  • Doing comparisons can help you find payment terms most favorable to you

There is usually a desire among consumers in the auto insurance industry to be able to get a policy where they do not have to pay for a portion of it, or all of it in some instances, upfront.

Though this desire may exist, the vast majority of consumers are generally unaware of the different options that exist in the marketplace.

On top of that, they may also not be fully aware of what can be driving forces behind whether or not they are asked to pay upfront for that car insurance policy.

As a consumer in the insurance industry, knowledge truly is a powerful thing. The more that you are aware of the different payment terms that insurance carriers are offering to consumers and also what drives those payment terms, the more educated of a buying decision you are going to make.

Doing a comparison of what all of the various insurers are offering can lead you down a track where you can answer the question as to whether or not upfront payment is required and if it is something that is worth seeking out for you.

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Typical Upfront Premium Costs


The most common thing that consumers are going to find in the insurance industry marketplace is that they will be asked to pay for the one month’s worth of premium upfront when they go to buy a policy.

This means that if you have an annual policy that has a premium of $1,200, you will be expected to pay for the first month of the policy, or $100, upfront.

That is the general rule of thumb that many of the big players in the insurance industry are going to abide by, but it is certainly not a requirement.

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Insurance Carriers Compete

The great thing about the insurance industry is that insurance carriers are always going to be looking for ways to compete with one another.

This means that, even though the big carriers may require an upfront premium, that does not mean that all of them are going to.

There are plenty of insurance carriers out there that are not going to have any requirements in terms of upfront premium that they are going to be asking for.

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What Drives Upfront Premium

The driving force behind upfront premium requirements is the risk that you as an insured present to the insurer.

If you have a pristine driving history and a near perfect credit score, you are likely going to find much more opportunity to get a hold of an insurance policy where you do not have to pay for anything upfront.

The reverse of this, though, is if you are someone who has a history of accidents and also a poor credit score.

These are the consumers that may be asked to even pay more than that first month of premium. In some instances, you may be required to pay for the full premium upfront before an insurance carrier will bind the coverage.

Shop for the Best Deal


You always want to shop for the best deal that is going to make the most sense for you as a consumer. You may find two insurance carrier that offers the same exact coverage, with the premium being around $100 difference between the two.

One may not require you to pay anything upfront, while the other may require you to pay a portion upfront. Is it worth it to you to save the $100 in premiums if you do not have to put out any money when the policy is bound?

These are the questions that you are going to have to answer when shopping for car insurance.

As a consumer in the car insurance industry, you have a lot of options to choose from. Always see what is out there in the market so that you can find the perfect balance of the value that you are getting the coverage and premium, with the payment terms that you are most comfortable with.

Paying upfront premium is not a requirement, but it is something that many insurers are going to ask of new business customers. Keeping this information in mind as you shop can help you make a sound decision on your insurance carrier.

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  1. https://www.allstate.com/tools-and-resources/car-insurance/how-to-compare-car-insurance-rates.aspx
  2. http://clark.com/insurance/best-auto-insurance-companies/
  3. https://www.esurance.com/info/car/how-accidents-affect-your-car-insurance-rate
  4. https://www.progressive.com/auto/discounts/compare-car-insurance-rates/