Swap from monthly to annual payments to save up to 15% on your car insurance.
With most car insurance providers, you can get a discount on your policy by paying the entire cost up front rather than making payments each month. Read on to learn more about the benefits of paying your policy in advance to help you get the best value on your coverage.
How do I get a paid-in-full discount?
When you break up your policy cost over six months or a year, your provider charges you a bit extra — typically around $10 a month — as a fee for processing multiple payments and updating your account. By paying your premium at once and eliminating those payment processing needs, you’ll save your provider some man hours — and save yourself some money in the process.
Paying in full at the start of your policy term demonstrates financial responsibility, leading to additional discounts — or a more favorable insurance rate.
How much will I save by paying up front?
How much you stand to save will depend on which provider you go with and what level of coverage you’re purchasing. But the average amount you can expect to save ranges from 8% to 15%. Here are a few of the top providers, and the prepay discounts they offer.
- Allstate. Save up to 10% off your entire policy cost just for paying up front for your Allstate coverage.
- Farmers. The Farmers Insurance website isn’t clear on how much you stand to save by paying your policy up front, but judging by industry averages, you could expect to save 8% to 10%.
- Geico. You’ll save as much as 10% off your policy if you pay your entire policy up front with Geico.
- Progressive. Progressive gives you a break for paying your policy up front, although it isn’t specified on their website. Expect the industry standard of 8% to 10%.
Compare car insurance providers with payment discounts
Pros and cons of different payment frequencies
Paid up front
- Rate is locked in
- Discount or savings for paying in full
- Bill is taken care of for the year
- Have to budget for large payment at once
- Cash is no longer liquid
- Have to wait for refund if canceling mid-policy
- Cash is available for other purposes
- Down payment usually required
- No rate lock
- Slightly higher rate
- Risk of missing payment without autopay
- Pay only for the miles you drive
- Up front deposit often required
- Inconsistent for budgeting
When is paying up front worth it?
Should you really fork over hundreds of dollars at one time just to save a few dollars? That depends on your financial situation and what you’re prioritizing. If you’re trying to save money on your bills, paying your premium up front can save you in the long run — even if it’s only $50 to $150 a year. However, if you can’t hand over hundreds (and hundreds) of dollars up front, making smaller payments may be your only option. Sometimes, that convenience outweighs overall savings.
Jill is comparing car insurance quotes and sees she can save 10% on her bill with a paid in full discount. Instead of paying $1,000 total for the year over 12 monthly payments of $83, she’ll pay $900 for her 12-month policy, which breaks down to $75 monthly payments. She’ll pay about $8 less each month and save $100 over the year. Since she can afford to pay her whole bill at the beginning of the policy term, she opts to switch to a one-time upfront payment to get the discount.
What other discounts should I look for?
If you don’t think you want to pay such a large bill all at once, or if you prefer the monthly bill payment structure that’s standard with most insurance policies, you might find equivalent savings through other discounts. This can be a great discount for some, but it’s certainly not the only way to save on car insurance.
There might be other discounts that could save you more than prepaying. If you’d rather not pay your entire policy at once, look into these discounts with your provider to see what you can save.
- Good student discount. If you’re a full-time student with a GPA above 3.0, you probably qualify for a break on your auto insurance in the range of 10-15%. Most providers have conditions and stipulations about age and full-time status, but you won’t know until you check with your insurer.
- Military discount. Whether you’re active service, in the reserves or a veteran, most major providers will give you a discount between 5-10% for your service to our country.
- Occupational discount. Do you work in education, healthcare, for the government or for a nonprofit? If you do, dropping your employer’s name or the names of professional organizations you’re affiliated with could net you a discount between 5-15%.
- No claims discount. If you’re a safe driver and haven’t filed any claims in three years or more, you probably qualify for a break on your premiums or a reduced deductible.
- Hybrid discount. Some providers offer a break of 5-10% if you drive a car that’s hybrid or fully electric. You could also get a discount if your vehicle has extremely good fuel economy, or if it’s rated to a certain level for low emissions.
If you can afford to pay for your entire car insurance for the year or like the peace of mind of paying one bill for the year, you could save around 10% on your premiums if your provider offers this paid-in-full discount.
Research and compare car insurance, including provider and policy options, to find the best deal for you.