Most people are familiar with the concept of car insurance policies. Typically, auto insurance policies are calculated over a period of time, usually three, six, or twelve months. Customers can choose to make their payments in a single lump sum or in monthly installments. In either case, you are paying for your coverage in advance.
However, there is another insurance option that most people are not familiar with. Some carriers like Insurance On The Spot offer monthly car insurance. At the beginning of the month, you make your payment, keeping in mind that the coverage only applies to that month.
So, why do some drivers prefer a monthly insurance policy over the more traditional three, six, or twelve-month options? There are several advantages.
Benefits of Monthly Car Insurance
- Minimal financial commitment – Some drivers simply can’t afford to pay a large lump sum for their car insurance. Opting for a month-to-month policy breaks up a policy amount into much more manageable sums.
- Increased flexibility – When you agree to a three, six, or twelve-month premium, you are stuck until the coverage period is over. Monthly car insurance plans give you the chance to change insurance companies every month. This flexibility makes it much easier to switch if you are unhappy with your current provider.
- Test drive a policy – If you aren’t certain what type of policy you want or need, monthly insurance policies give you the chance to try a policy (or a company) out before committing to it.
Negatives of Monthly Car Insurance
There are negatives to everything, including having a monthly insurance policy. For example,
- Fewer benefits – Monthly policies rarely include all the extras that come with long-term policies. For example, they don’t include rental car reimbursement or roadside assistance.
- Increased expense – Monthly car insurance policies tend to be more expensive. There are several reasons for this. One, insurers know that policies can be canceled at any time, which makes this less profitable for them. To compensate for this, they charge slightly higher amounts each month. Second, they do not come with many of the discounts associated with long-term policies, such as a paid-in-full discount. (However, this doesn’t mean that you may not qualify for some other type of discount.)
- Lapsed policies – If you forget to make your monthly payment, your policy may lapse or be terminated before you even realize it. This means you’ll be driving without insurance coverage, which could result in major problems.
The Cost of Monthly Car Insurance
Your car insurance costs can vary significantly, depending on what state you live in. This is because states have different requirements and rules. Several other factors can influence the cost of your monthly policy, including your driving history, the make and model of the vehicle, and your age.
Saving on Your Monthly Car Insurance Policy
Remember that monthly automobile insurance policies aren’t much more expensive than long-term ones. In fact, some drivers will pay as little as 2 to 3% more than semi-annual and annual policyholders. There are even cases where the driver pays the same amount as drivers with long-term policies.
With that being said, it is possible to save money and find discounts on month-to-month policies.
- Bundle your policies. You can combine your car insurance policy with other policies, such as your motorcycle, water vehicle, homeowners, or life insurance policy. On average, you’ll save around 10 to 20% by bundling policies together.
- Choose a higher deductible. A deductible refers to the amount you pay out of your own pocket before your insurance covers the remainder when you file a claim. Selecting a higher deductible, such as $1,000 will cause your monthly price to drop slightly. Just be sure that you have the amount of your deductible in the chance you file a claim.
- Drive less. You can get big discounts if you drive less than 800 miles per month. This is because you are on the road much less and have a lower risk of getting a ticket or being involved in an accident. Most insurance companies will compensate you for this by giving you a discount.
- Reconsider your coverage amounts. You may not need comprehensive collision coverage if you own or are driving a vehicle that’s over five years old. You might get by with a basic liability policy, which will save you hundreds each year.
Alternatives to Monthly Auto Insurance Policies
If paying your car insurance on a month-to-month payment doesn’t seem like the best option for you, you’ll be happy to know that you have options. They include:
- Short-term car insurance – With short-term car insurance, you can easily cancel your policy when you no longer require it. You’ll receive a refund for anything that you may be owed. Almost all companies offer short-term policies. However, you may have to ask about them.
- Annual or semi-annual policies – With this type of policy, you pay every six months or just once a year. Then, you don’t have to worry about your policy again until it is time for renewal. This may be your most convenient option if you can afford to pay a large sum at one time.
- Non-owner insurance policies – If you do not own a vehicle, but want to maintain insurance coverage just in case you end up driving someone else’s car or renting a car, a non-owner policy is ideal. This will provide you with the protection you need in the event you are involved in an accident.
Final Thoughts on Monthly Car Insurance Policies
For some drivers, monthly car insurance policies are a great option, but not for others. It is completely dependent on your current situation.
If you think a month-to-month policy is for you, it’s time to start getting quotes to ensure you get the best price possible. With Insure On The Spot, you can compare ten or more quotes right from your smartphone or call toll-free and get a quote from a licensed agent. Compare monthly auto insurance quotes now and see how much you can save.