Ask the Car Insurance Expert
Can I pay for my car insurance monthly, instead of facing a big payment every six months?
Many car insurance companies offer monthly installment plans. These can be appealing if you live paycheck to paycheck and have trouble coughing up several hundred dollars or more every six months.
Before you choose a monthly installment plan, though, get car insurance quotes to compare the difference between paying outright for six months of coverage and paying monthly. In many cases, you'll pay more in total for coverage with an installment plan. The difference varies by company -- from under $20 a year to more than $100. Some state insurance departments limit how much extra insurance companies can charge for installment payments.
A monthly payment plan makes it easier to budget, but is the convenience worth it?
It is if you would otherwise miss a payment and risk losing your car insurance. Driving without liability auto insurance is against the law in every state except New Hampshire, and it could lead to financial disaster. Imagine causing a multiple-car pileup and getting sued. Moreover, if your car insurance is canceled because of nonpayment, you'll pay higher car insurance rates next time you go shopping for coverage.
Setting up an automatic monthly payment from your bank account to the insurance company is a smart idea if you have trouble keeping track of bills. Just make sure you keep close tabs on your bank account so there's enough money to cover the bill each month.
Another option is to pay the insurance company twice a year, but set aside money in savings each month. That way, when the bill arrives in the mail, the money is there to pay it.
For more, see Payment plans can increase the cost of your auto insurance.