Auto insurance charges could be deducted from your bank account automatically. Your insurance provider can deduct your premiums from your bank account every month, or every six months. This way, your policy could be automatically renewed without you having a coverage gap. You could learn all about automatic payments and insurance with us today, how they work, their pros and cons, and whether or not there are autopay discounts.
Automatic Payments and Insurance: How Do They Work?
Automatic payments and insurance often go hand in hand. Almost all companies encourage their clients to use automatic payments (called automatic payments for short). Autopay is also the same as recurring payments. Using automatic payments or recurring payments, your provider deducts your fees frequently and then maintains your coverage.
The companies find autopay useful. With this, it is easy for the company to renew their clients’ policies. Clients who use autopay wouldn’t see as much motivation to shop around after the policy finishes.
On the other hand, clients might also find autopay useful for them. With this, the risk of a lapse in car insurance decreases. So, the chance of driving on the roads without insurance is less.
Paying for Insurance
Almost all companies offer different choices for you to pay for your insurance. Read below to know them:
- Write a check online
- Use a credit card or a debit card
- Arrange automatic payments online (using Electronic Funds Transfer (EFT), for instance)
- Set up an automatic payment credit card or debit card
- Send a personal check to your provider by mail
You could choose several different periods to pay for your insurance. Perhaps, you could make a lump sum payment beforehand, paying six to twelve months in advance. You can also pay your quotes in two, three, or four partial payments. Nevertheless, almost all drivers pay on a month-to-month basis.
Automatic Payments and Car Insurance: Arranging Autopay
You could sign up for a policy with an automatic payment plan from the beginning. When you first purchase your policy, you could allow your provider to deduct your rates from your checking account or to charge your credit card directly every month.
If you don’t know whether auto payment is arranged with your insurance or not, then you can reread your contract and other documents to be sure. Contacting your provider could be another way to clear up doubts.
In case autopay is not arranged with your insurance and you want to do it, contact your agent and ask if they can get you there. Almost all companies will gladly set up autopay with your car policy.
Nowadays, almost all companies have an app available to clients. If this is your case, setting up automatic payments and insurance will be even more accessible.
When Is Autopay Taken from My Account?
Autopay is a process that functions according to your payment schedule. If you pay your premiums once every six months, for instance, your fees will be automatically deducted from your account once every six months. Instead, if you pay your quote monthly, once a month, your payment will be deducted from your account.
Your payments may be automatically deducted on the date you bought your policy or near that day. Let’s say you have bought your policy on January 12th. Well, your payment should be automatically deducted every January 12th or on the nearest business day after January 12th.
Automatic Payment Discount
Maybe you could find some companies that offer immediate savings if you set up automatic payments. For instance, a company could deduct $50.00 from your next payment if you arrange automatic payments with your insurance today.
As we have said before, the companies are always encouraging their clients to join automatic payments and car insurance. With this, there are fewer opportunities for you to sign up with a cheaper insurer when it’s time to renew your policy. This is the reason why several companies offer discounts as motivation to promote automatic payments.
You should not think that your bank account will grow fat with automatic payments. Nor will the discount on your insurance rates be reflected on your monthly statement. A standard automatic discount is a one-time thing that saves you from $50.00 to $100.00 from your payment annually.
Some companies provide automatic payments discount and paperless discount packages. Now, 21st Century, Farmers, Liberty Mutual, and Progressive offer some kind of autopay or paperless discount, while other top companies do not provide these options anymore.
Pros and Cons of Automatic Payments and Car Insurance
There are two essential things to keep in mind when it comes to automatic payments and insurance; one is a great benefit, a positive aspect, and the other one is not:
Positive: Autopay reduces the risk of driving on the roads without coverage because the likelihood of having a gap is minimal. This lowers your financial risk, and you shouldn’t have to think about payments until you decide to cancel your policy.
Negative: Being satisfied with automatic payments and insurance, you may not regularly shop around for quotes online. If your fees are automatically deducted from your bank account, and you are not worried about this, you probably don’t think you need to change your company. By making the payments yourself, seeing that some of your money is going away each month, you may have more reasons to compare quotes.
Canceling an A Policy with Automatic Payments
Canceling a policy with automatic payments is the same thing as canceling a regular policy. Having set up an automatic payment system on your plan with your current company is not a reason that can stop you if you want to switch to another provider. You should regularly compare quotes online to check if your current policy is the best you can have, regardless of whether you have arranged automatic payment or not.
