How does month to month car insurance work?

You should pay your car insurance bill once or twice a year in most cases. How often you pay car insurance premiums depends on the company and your preferences, but annual or semi-annual payments are best. That’s because most car insurance policies last six or 12 months, and most car insurance companies give a discount – as much as 20% – for paying your premium in full upfront.... read full answer

Most people either pay in full or choose monthly installments, but your insurer may also offer quarterly payment plans, meaning you’d pay every three months (four times a year). You may want to think twice before choosing one of the more frequent payment options, however.

The more frequently you pay, the more your coverage is likely to cost, due to:

• Higher Premiums. If your insurance premium costs $1,000 a year, your insurer might charge slightly more than $83.33 per month (how the math works out if you divide by 12) if you want to pay monthly. They might charge $87.50 per month, for example, bringing your annual total to $1,050. The extra cost is needed to cover additional administrative expenses associated with monthly billing.
• Fees and Penalties. There often are processing fees for electronic payment methods like bank transfers and credit cards. They apply to each payment, so fewer payments means fewer fees. There’s also the added risk that you’ll forget a payment when you add more due dates to the mix, and that could result in late fees as well as penalties for lapsed coverage.

Remember, you are required to pay your bill in advance to be covered, but how far in advance depends on your preferences and the insurer’s policies. On a monthly payment plan, you’re paying for next month’s coverage in advance. If you miss a payment or pay late, you’ll be left uninsured. The insurer must collect the premium for your policy to be binding and up-to-date.

Finally, it’s worth noting that most car insurance quotes are based on a six-month policy paid in full at the beginning of each term. But insurers generally have other options available. Before you pick a payment plan, make sure you’re clear on the details and ask about other discounts you may qualify for.

No, Geico does not offer temporary car insurance. The only way to get short-term car insurance from Geico, or any other reputable insurer, is to purchase a six or 12-month policy and cancel when you no longer need it. If you decide to terminate your Geico car insurance policy early, you will not be charged any cancellation fees. You may also be able to get a refund for any unused coverage time you’ve prepaid for.... read full answer

One Geico alternative to temporary car insurance is a non-owner policy, which is available to drivers who do not own or have regular access to a vehicle. Non-owner car insurance is cheaper than a standard auto policy, since you are not covering a specific vehicle. If you rent or borrow vehicles often but don’t own a car yourself, then Geico’s non-owner car insurance is an affordable option.

Purchasing a 12-month car insurance policy is better than purchasing a 6-month car insurance policy if you’re a good driver with a clean driving record and the option is available to you. Six-month car insurance might be best if you have a moving violation or a few points on your license that will expire soon. The main benefit of a 12-month policy is that it locks in your rate for a year. Plus, if you pay your annual premium upfront, you can qualify for a discount and eliminate the hassle of more frequent due dates.... read full answer

Some insurance companies still offer annual policy terms, along with a 6-month option, including Liberty Mutual, USAA, Erie, The Hartford, The General, Infinity, Safeco, and Unique. But it is becoming less common for insurance companies to offer 12-month terms because reviewing and adjusting rates more often is better for business. That’s why insurers default to 6-month policies and why most insurance-premium quotes assume a 6-month term.

Insurance companies revise rates at the end of a policy term. They largely consider changes to your driving record and claims history during that period. But even if your driving record and insurance profile have not changed, your rate can still go up. That’s because insurance companies regularly adjust rates for all consumers to account for pricing miscalculations and unexpected claims.

6-Month vs. 12-Month Car Insurance Policies

A 12-month car insurance policy tends to be more secure, given that car insurance rates overall usually go up over time. But that doesn’t necessarily mean you’re getting the best value. You still need to compare multiple companies for both 6- and 12-month policies to know you’ve found the best deal.

Six-month policies have some perks of their own, after all. More frequent policy renewals could potentially benefit drivers with less-than-perfect driving records who’ve since changed their ways. If you can keep your driving record clean and have a previous infraction due to expire in the next six months, your rates could go down.

A 6-month car insurance policy might also benefit drivers who will soon pay off a car loan as well as those who improve their credit. Car insurance companies use information from your credit report to calculate your rate, and the less debt you owe according to your report, the better it is for your credit standing. In addition, many lenders require extra coverage when you finance a car, such as comprehensive and collision. If you no longer want to keep as much coverage as the lender required, scaling back could lower the cost of your premium.

Whether you choose a 6-month or 12-month car insurance policy, it’s always better to pay in full. When you make monthly payments, you’ll probably be charged slightly more on your premiums and may also be subject to additional payment processing fees if you pay electronically. Even if these are only a couple of bucks a month, they can really add up over the term.