Can you pay your car insurance yearly?

When you’re planning to buy a car, you also need to prepare to buy auto insurance. You always have the option to buy warranties or extra forms of protection in the dealer’s finance office, but buying insurance on the car is mandatory.

Since the insurance expense is something that you’ll have to pay for as long as you own a car, it’s something that needs to be incorporated into your budget.

If you’d prefer not to have to worry about making payments every month or every quarter, it might be best for you to pay your premiums annually.

Unfortunately, if you select the wrong policy when you’re applying for insurance, you might not have the option to pay for a year’s worth of car insurance all at once.

Compare quotes for car insurance today by using our free rate tool above.

Here’s what you should know:

Selecting the Right Policy Term

There’s a lot of focus placed on finding a low-cost insurance quote and very little focus on choosing the right type of term. Just like auto insurers aren’t one-size-fits-all, insurance policies aren’t either.

When you’re shopping for your coverage, you’ll have to decide if you want to buy a six-month term or a 12-month term.

The term of the policy is how long the coverage will remain in effect. When you’re buying personal insurance policies, there are only two different terms to choose from. You’ll either have a policy period that lasts for six months at a time or one that lasts for the entire year.

Policy periods are very important. They protect the insurer from being stuck in a contract that they would like to end.

During the term, the insurance company is obligated to provide you with coverage as long as you’re paying the premiums and you’re always forthcoming with relevant information. At the end of the term, the insurer can then decide if they want to renew your policy.

Read more:

• Can I pay car insurance quarterly?
• Can you renew your car insurance early?
• Do you have to pay car insurance every month?

Do insurance companies sell both terms?

Insurance companies don’t always have to sell both term options. In fact, most companies will only offer you the option to buy one of the two insurance terms. When you’re looking for the right company, you should first check to see what the product offering is. If you’re only offered six-month term and you want to pay annually, you need to look for a new company.

Why You Can’t Pay for a Year with a Six-Month Policy

If you happen to purchase a six-month policy without first understanding how terms work, you might wonder why you can’t pay for your insurance for the year. The main reason that you can’t is that you’re only billed for policy premiums for the next 183 days rather than 356 days.

Your solution might be to double your premiums, but that still won’t work. Doubling your premiums would only be an effective way to pay for premiums for the next year if the rates were the same the next term.

Since insurers have the option to underwrite your policy and then change your rates at renewal, there are no guarantees that your second six-month term will be the same as your first one.

Making Your Full Payment Upfront

When you’re initially applying for a policy, you have to provide some very detailed information about the following:

• yourself
• your car
• your household

You’ll also be expected to submit your first payment so your coverage is temporarily bound during the underwriting period. If you don’t submit a payment, the coverage isn’t protecting you.

Many people will only pay a down payment upfront to bind their coverage. If you’d rather pay the whole premium at once to get the exchange out of the way you can.

It’s important that you know that the quote that accompanies your application isn’t guaranteed. There’s always a possibility that your final rate could be more or less than you were quoted if there’s misinformation.

What are the most common reasons that your annual rates will change?

You trust that the quotes that you’re given are going to be accurate. When you’re relying on the estimates that you’re given to make a purchasing decision, you want to be sure that the agent isn’t purposely giving you a low estimate just to get your business.

This is an illegal practice if you can prove that low estimates were intentional.

If you’re misquoted because of missing information, you can’t take any action. This is the most common reason that quotes change when they are assessed and the information is verified.

Typically, the applicant has a ticket or an accident that they didn’t disclose. Sometimes, the difference is because of errors in driver information or because of a digit in the VIN that leads to a different ISO classification.

What happens if your rates change during underwriting?

If you failed to mention you were recently convicted of speeding or someone in your home didn’t tell you about an at-fault accident, you’re going to have to pay more than you were quoted from the start.

That upfront annual payment that you made for the 12-month term isn’t going to be enough to pay the policy off. You’ll be billed for the difference.

If you’re lucky enough to get some discounts or your rate goes down for an expired surcharge, you’ll be entitled to a refund. Any extra money that you’ve paid for the full premium will be returned to you in the mail.

If you’re billed for additional premiums, you may have to pay a billing fee.

You can pay for your auto insurance yearly as long as you apply for a 12-month term. The only issue with this is that a lot of companies prefer to offer six-month terms. Start to shop around for a longer term now.

Use an online rate quote tool, compare rates, and then pay for the policy you want in full. Enter your zip code below to compare quotes side-by-side.

Case Studies: Paying Car Insurance Yearly

Case Study 1: Swift Insurance

Sarah, a 35-year-old marketing executive, decided to pay her car insurance premium annually with Swift Insurance. She found that by paying upfront for the entire year, she was able to secure a significant discount on her policy. This approach not only offered her peace of mind but also allowed her to plan her budget more effectively.

Sarah appreciated the convenience of making a single payment and felt reassured knowing that her car was protected for the entire year.

Case Study 2: Guardian Auto Assurance

John, a 42-year-old accountant, switched to Guardian Auto Assurance and opted for an annual payment plan. His previous insurer offered only monthly payment options, which he found inconvenient due to the additional transaction fees. With Guardian Auto Assurance, John was pleasantly surprised to discover that paying annually not only eliminated these fees but also resulted in a lower overall premium.

The ability to pay his car insurance in one go enabled him to streamline his financial obligations and focus on other important aspects of his life.

Case Study 3: Liberty Vehicle Insurance

Emily, a 27-year-old teacher, chose Liberty Vehicle Insurance for her car coverage and decided to pay her insurance premium on a yearly basis. She initially had concerns about making a larger upfront payment but found that the savings she received by paying annually outweighed any initial apprehension.

Emily appreciated the simplicity of having her car insurance sorted for the entire year without the need for monthly reminders or transactions. The peace of mind and financial flexibility provided by Liberty Vehicle Insurance’s annual payment option were invaluable to her.

Case Study 4: Nationwide Car Protection

Michael, a 52-year-old retired engineer, had been paying his car insurance monthly for years until he switched to Nationwide Car Protection. Upon realizing the benefits of annual payments, he decided to make the change. By paying upfront for the year, Michael found that he saved a considerable amount compared to his previous monthly payments.

Moreover, the hassle of remembering to make monthly payments was eliminated, allowing him to focus on enjoying his retirement and driving worry-free.

Case Study 5: SecureDrive Insurance

Linda, a 30-year-old entrepreneur, opted for SecureDrive Insurance and chose to pay her car insurance premium yearly. She appreciated the simplicity and convenience of having one less monthly bill to worry about. By paying upfront, Linda could better manage her finances and allocate funds for other business expenses.

SecureDrive Insurance’s annual payment option not only provided her with financial stability but also ensured her vehicle was protected throughout the year.