All About Automatic Payments and Car Insurance – Are There AutoPay Discounts?

Car insurance can be deducted from your bank account automatically. Every month, or every six months, your car insurance company may deduct premiums from your account, automatically renewing your policy and ensuring you avoid a lapse in coverage. Today, we’re explaining everything you need to know about how automatic payments work, including whether or not there are autopay discounts.

How Automatic Payments Work with Car Insurance

car insurance and autopayMost car insurance companies encourage their customers to sign up for automatic payments – or autopay for short.

Autopay is good for car insurance companies. It makes it easy for the car insurance company to maintain the customer’s business. The customer doesn’t have as much incentive to shop around when the policy ends.

Autopay is also good for customers. It reduces the chance of a car insurance lapse. It reduces the likelihood of you driving without car insurance.

Autopay and recurring payments are the same thing. With autopay and recurring payments, your car insurance company is charging your payment method regularly to maintain car insurance coverage.

How to Pay for Car Insurance

Most car insurance companies give you several different ways to pay for car insurance, including all of the following:

  • Write an online check
  • Use a debit card or credit card
  • Setup automated payments online (through Electronic Funds Transfer or EFT, for example)
  • Setup automated payments with a debit card or credit card
  • Mail a personal check to your insurance company

You can pay for your car insurance over several different periods. Some people pay their car insurance upfront as a lump sum, paying for the entire 6 to 12 months upfront. Others pay their car insurance in two, three, or four installments. Most drivers, however, pay their car insurance monthly.

How to Setup Automatic Payments with Your Car Insurance

Your car insurance policy may already be set up under an automatic payment plan. When signing up for the car insurance policy, you may have agreed to let the car insurance company charge your card or deduct money from your checking account every month.

If you’re unsure whether or not autopay is set up with your car insurance, then check your car insurance documentation to make sure. Or, call your car insurance company.

If autopay isn’t set up, then you should be able to contact your insurer and get it set up. Most car insurance companies are happy to set up autopay on your account.

If your car insurance company has an app (most now do), then you may also be able to set up recurring payments through the app.

When Are Automatic Payments Taken?

Automatic payments are processed based on your payment schedule. If you’re paying for premiums every six months, for example, then payment will automatically be deducted from your account every six months. If you have a monthly recurring payments schedule, then payment will automatically be deducted from your account every month.

Payments will be deducted on or close to the date on which you bought your car insurance policy. If you bought your policy on March 6, for example, then your car insurance payment should be automatically charged every March 6 – or on the closest business day after March 6.

Ask About an Automatic Payment Discount

Some car insurance companies will offer instant savings if you switch to automatic payments. The car insurance company might deduct $50 from your next payment if you agree to sign up for automatic payments today, for example.

Again, car insurance companies love when you sign up for automatic payments. It reduces the chance that you’ll switch to a cheaper insurance provider every time your policy is scheduled for renewal. That’s why many car insurance companies give you an incentive to set up automatic payments.

Don’t expect to save a lot of money with automatic payments, and don’t expect the discount to appear every month. Instead, a typical automatic payment discount is a one-time discount of $50 to $100 from your annual car insurance payment.

Some car insurance companies bundle an autopay discount with a paperless discount.

21st Century, Farmers, Liberty Mutual, and Progressive all currently offer some type of autopay or paperless discount, although other major car insurance companies no longer offer it.

Advantages and Disadvantages to Automatic Car Insurance Payments?

There’s one big advantage and one big disadvantage with automatic car insurance payments:

Advantage: You reduce the chances of letting car insurance lapse and accidentally driving your car without car insurance. You reduce your financial risk and can avoid worrying about car insurance bills until you cancel.

Disadvantage: You may get complacent and forget to compare car insurance quotes online regularly. When payments are automatically deducted from your account, there’s less chance that you’ll switch to another company. With manual payments, you have more incentive to shop around every time you make a payment.

There’s no difference between canceling an autopay policy and an ordinary policy. There’s nothing preventing you from switching to a new provider just because you have automatic payments set up with your old provider. Compare quotes online today to make sure you’re getting the best deal on car insurance – whether you choose to set up automatic payments or not.

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