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: Nov 6, 2020

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Here's what you need to know...

  • Paying for auto insurance is a requirement for driving in almost every single state
  • There are different payment options that you can arrange through your insurance company to set up the payment intervals and forms of payment
  • You may be able to save money by choosing to pay your insurance premium in one annual payment rather than on a monthly billing cycle
  • Paying insurance premiums on a monthly basis rather than in annual lump sums means there is a greater opportunity for you to accidentally miss a payment
  • If you miss a payment for your auto insurance, you could be hit with penalties and late charges. Your insurance policy may eventually get canceled, with could result in suspension of your driver’s license and higher premiums in the future

If you own a registered vehicle, then you are likely required by your state’s laws to have some form of car insurance policy.

Part of maintaining proper insurance coverage is paying your premium, and you can face stiff penalties under state law and higher fees from your insurance company if you fail to do so.

There are various payment options you can consider in making sure that your required premium is paid on time.

Enter your zip code above to compare car insurance rates from multiple companies at once!

Consequences of Not Paying Your Insurance Premium

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If you fail to pay your auto insurance premium, your insurance company has the right to cancel your policy. Even though insurance companies typically cannot cancel a policy that has been in force for a period longer than 60 days, there is an exception for policyholders who fail to pay their premiums.

In addition to facing the potential cancellation of your insurance policy, you could be looking at future insurance rate increases as a result of failure to pay your premium. Insurance companies keep records of your payment history, and this may be a factor in future rates you are eligible for.

Besides the potential financial headache of dealing with an insurance policy cancellation, you could be facing harsh penalties under state law for driving without a current insurance policy.

In many states, the law requires the insurance company to notify the state motor vehicle department of the cancellation of an insurance policy.

The state may then follow up to make sure that the driver takes out another insurance policy to comply with at least the minimum coverage requirements for that state.

In the event of an accident, the state motor vehicle department may follow up with your insurance company to see if your coverage is still valid.

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Options for You in Paying Your Insurance Premium

In general, the full amount of your insurance premium is due to the insurance company at the start of your policy. Most policies are on a six-month basis, which means that the premium would technically be due every six months.

However, out of convenience, most insurance companies allow for monthly payments so long as the payments are made on time.

There are many factors that ultimately influence the cost of your auto insurance premium, but one thing you can control is the payment options for your premium. You should ask your insurance company about the differences in rates depending on how often you pay your premium.

For example, many insurance companies offer a slight discount for policyholders who pay their premium on an annual basis.

You may also have the option to pay your insurance premium in just two installments a year, every six months. This can take the sting out of making one annual payment. It can also help you avoid the hassle of having to remember to make your insurance payment every month.

Of course, the more times per year that you have to remember to make an insurance payment, the more likely you are to forget a monthly payment.

You will have to weigh this possibility against your financial and cash flow situation.

In addition to the frequency of payments, it may be possible to reduce fees from your insurance company by selecting an automatic payment option. This would involve giving the insurance company the option to automatically deduct the payment from your checking account or charge it to your credit card.

Maintaining Proof of Insurance and Payment

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Many states require that all drivers maintain proof of insurance in their vehicle when driving. Even if this is not the case in your state, it is still a good idea to maintain proof of insurance with you.

In addition, you should keep a file with your policy information, which would include the actual agreement and information about your premiums.

It can be helpful to retain records of your premium payment receipts. Some companies offer a payment history that is viewable through your online account.

The Bottom Line on Paying Your Car Insurance Premium

To avoid the headaches associated with either having your auto insurance policy canceled or late fees assessed by your insurance company from missing a payment, it may be best to schedule your premium payment in one annual sum.

You can work directly with your insurance company to arrange a schedule that works best for your needs. You should ask about whether you will receive a discount on your rate for paying your premium in a lump sum rather than in monthly installments.

Enter your zip code below to find car insurance premiums that work for your payment schedule!