A recent study showed that 7 out of 8 drivers have auto insurance, which means most people have auto coverage.
Having car insurance is a legal requirement in most areas, and it offers the protection you need when you get behind the wheel of a car.
One question you might have is whether you should pay your premiums annually or monthly. If you’re wondering this question, read this guide to learn more about your options.
Annual Costs Are Harder to Pay
When you start wondering whether to pay your premiums annually or monthly, you may want to consider the costs. How much is your auto insurance each year?
The amount you pay for an entire year of auto insurance coverage will be a lot more costly than the amount you pay monthly. Therefore, you might want to consider whether you can even afford to pay your bills annually.
Most insurance companies bill either monthly or semi-annually, but some might also bill you annually. If you ever had a DUI, you might pay higher rates than average, especially if you need SR-22 insurance.
The bottom line is that you should consider the differences in costs to see which one fits your budget the best. If you can pull off paying for an entire year at once, you may want to go ahead with it.
Paying Monthly Increases the Costs
When you pay every month, the insurance company divides the annual costs by 12 to determine the monthly amount. Paying monthly makes insurance policies more affordable, but there might be extra costs with it.
Most auto insurance companies charge extra fees to customers who pay monthly. Many companies charge a monthly fee for allowing you to pay monthly instead of annually.
This monthly fee covers the administrative costs of billing a person monthly and processing monthly payments. It also covers the extra risks insurance companies have by allowing their customers to pay monthly.
Paying Annual Reduces the Risk of Lapses
There is one final thing to consider. Insurance companies might allow you to pay monthly, but paying this way increases the risk of lapses occurring with your plan.
When you pay monthly, you must remember to pay your bill. If you fail to pay it, the insurance company might cancel your policy.
Getting your policy canceled can be devastating in any case. It can be even worse, though, if you have an SR22 policy or business insurance plan.
If your policy lapses, you might experience challenges trying to find a company to insure you. You might also pay higher rates after a lapse occurs.
Get an Insurance Quote to See If You Can Save Money
Purchasing car insurance is a vital part of life if you drive or own a car. While having insurance is crucial, you shouldn’t overpay for your coverage.
You can learn more about the costs of car insurance by contacting our insurance team at Insured ASAP. You can call us to learn more or request a free auto insurance quote.