Should you pay your car insurance by the year or in smaller sums spread throughout the year? That is one of the questions that you must answer whenever you start shopping for new coverage. Before you make that decision, there are a few considerations regarding the cost of insurance each month. You also should keep in mind that it is about tradeoffs as well.

Reasons You Might Choose to Pay for Insurance Each Month

There are some benefits to paying for your insurance every month, which can include:

• Better ability to budget your expenses. You already know what you are paying and when it is due.
• A lowered amount. Paying your insurance in six month terms can be out of the reach of some budgets, so breaking it down to monthly payments can allow for better coverage.
• It allows for more flexibility. If you need to make a change to a policy or even decide to go to a new company, you can do so much more easily with a monthly payment plan than you could if you pay six months or longer in advance.

Why It Might Not Be a Good Idea

There are some drawbacks to paying your insurance each month as well. These include:

• It can increase the cost of your insurance over the long term.
• If you miss a payment your insurance can lapse.
• The cost of your insurance might go up or down based on certain circumstances during the previous month.
• You might feel like you are not able to shop for quotes to take advantage of new laws or other benefits.

Making Your Monthly Insurance Cost More Affordable

If you do plan to pay your insurance on a monthly basis, there are several ways that you can make sure that you are still getting the best price for your coverage. These ways include:

• Negotiating for a reduction or waiver of the monthly service fees. While this may not be a widely advertised option, there is a small chance that the provider will allow it.
• Shopping for no frills insurance from companies that eliminate many of the major expenses of insurance to further lower the overall cost.
• Only buying the right level of coverage.
• Skipping the fees by having the money automatically transferred from your bank account. Automatic bill paying is typically a service that is beneficial to both parties.

Shopping for Quotes Is Your Key to Good Coverage and Prices

Before you start an insurance policy, it is important that you consider whether or not you have found the absolute best price for that coverage. If you are only buying minimum insurance, then you should know what the national averages for coverage are to use those amounts for your starting point. Your quote shopping should include:

• At least three quotes from different companies. In addition, ask each to give you different coverage quotes so that you can choose the best service, the best coverage and the best price.
• Remember that a quote is not binding. There are many things that can make your actual insurance cost higher or lower that will not be evident during the initial quoting period. For instance, you might find that your credit report is driving the insurance cost higher, but that would be something you might not be aware of when you call or click on the website.
• Make sure that you are being truthful when you are asking for your quote.

How Often Should You Shop for Quotes for Insurance?

If you are paying for your insurance on a monthly basis, you can make a number of changes from month to month. However, there are a number of other instances when you might need a new quote. Always ask for insurance quotes when your circumstances have changed including:

• You get married or divorced.
• One of your children reaches driving age.
• Your driving child moves out of your household.
• You are buying a new car.
• You have paid off a loan on your car.
• You have refinanced a loan on your car.
• You are moving to a new location.
• You add a safety or security enhancing feature to your vehicle.
• You move into a new age category.

Of course, if you simply feel like shopping for an insurance quote, you can do so at any time.

If There Is a Problem with Your Monthly Insurance Premium

There are a number of times where a payment is just not fitting into the budget like it is supposed to. While it might be embarrassing to admit that you are struggling, it is important to keep ahead of your insurance payment so that you do not lapse. Keep these things in mind:

• A late payment can result in a late fee. If you go past ten days, your insurance can lapse. The provider is not obligated to reinstate your insurance at that time, which can make getting new coverage difficult.
• If you send in a check for the payment and it is returned, you will incur the late payment from the insurance company plus overdraft fees from the bank. That amount can quickly add up- in some cases as much as $30-50 per bounced check.
• Continually not paying your insurance on time can possibly lead to the insurance company dropping you from their coverage.

As soon as you know that there is a problem with making a payment, call the insurance company and ask for solutions to the problem. If it is a once only struggle, the company may defer the payment for that month, usually delaying it for two weeks or so. In addition, they might break the payment into two rather than expecting it all at once. It is important to be honest and let the insurance company know what is happening.