Pay quarterly, rather than month to month
Insurance is expensive, but necessary, and one great way to save on your premiums is to pay quarterly rather than month to month.
Insurance companies make their money by charging you a premium for a level of risk that they will assume for you should you have an accident, etc. The premium for the same service can vary depending on who your insurance provider is. One thing remains the same, however, and that is that you have to pay a premium for coverage. Typically a premium is assessed for a period of time. A six month period for your car is typical. Home owner's insurance is typically billed yearly, etc.
|
|
An insurance premium is generally collected in monthly, quarterly, bi annual or annual payments. If you do not make your scheduled payment, your policy is usually ineffective until you renew it, start over, or pay for the gap in payment. A person who neglects to make a payment has what is called a "lapsed policy". Either the customer will have to pay the balance of the insurance premium and become reinstated or the policy will become null and void. Because the billing cycle may be lengthy, it is not unusual for policy holders to forget to make a payment before the policy lapses. There is really no such thing as "late fees" with insurance, as if you do not pay you just do not have coverage, however, paying quarterly, bi-annually, or annually can save you a lot of money.
It can save you from forgetting to pay your insurance and losing coverage when you need it. It can save you the monthly installment fees charged, and it can save you rate increases during the rate period.
For example, if you have an accident during a period of time that you have already paid for, and when the accident report shows you, the policy holder was at fault, your rates will go up. However, in many cases, the insurance company will charge you less due to the fact that they have less paperwork to file, bills to change, etc.
In addition many insurance companies charge you a monthly service fee if you choose to pay your bill that way. Paying your bill quarterly or each time the period is assessed, such as bi-annually or annually you can get rid of that fee saving a good chunk of money over the course of a year. Most major insurance companies charge a $5-10 dollar monthly service fee for those paying their insurance bills every month, instead of upfront all at once. Not having to pay this fee automatically puts $60-120 dollars per year in your pocket, or into your cash reserve.
So, in summary, paying quarterly, annually, or bi-annually, or whenever your insurance is assessed will save you money because it will mean you do not have a lapse in coverage, and you can avoid the monthly installment fees.
