Many companies now offer customers the option of paying premiums for vehicle insurance on a periodic basis rather than as a single full term payment. When buying coverage for your automobiles, a typical policy term could be three months, six months or one year. By paying fees monthly, if it is allowed, the cash out of pocket to acquire the initial policy will be significantly less. Essentially, monthly car insurance allows you to have coverage on a thirty day installation plan.
One of the major advantages for purchasing coverage for your vehicle in this way is the up front cost. It is much more manageable and makes it possible for clients to pay smaller amounts over time. Budgeting is much easier when you can know the exact amount that will be due on a certain obligation for a period as long as the policy term.
You can specify the companies that offer this type of payment plan when you shop for policies. Many carriers offer options such as these when you request. You still have policies that last the typical time lengths, it is just the payment that is spread over the length of the term.
Another reason for choosing an installation plan for payment is the ability to shop around. If you find another carrier that will provide better coverage or prices, you can simply switch carriers. With a standard policy, the customer may have to wait for the policy term to expire before making a change. This may mean significantly more costs, even though you have found another carrier. Alternately, you would have to wait for a refund to be processed, which could result in another cash flow issue.
There are a couple disadvantages to paying your insurance premiums on an installation basis. The service charges for monthly processing can add up quickly. Some companies may charge as much as ten dollars monthly, just to process your payment. Over a year's time, you may pay more than $ 100 in extra fees and charges. For those who are on a very restricted budget, this can make a big difference in cash outgo.
When you purchase monthly car insurance, you must make your payments on time. If you miss a payment, companies have the option of canceling your policy with minimal notice. You may be charged a penalty to reinstate the policy. Even a late payment can be a black mark on your credit history.