When you are in the market to get your car insured, there are a number of ways you can make your auto insurance payments. Most policies last for a period of six months. Some, if you inquire, will extend for 12 months. The price that you receive for that period is called the premium. Essentially, the two ways to pay that premium are a lump sum and in monthly payments.
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The quickest, most hassle-free way to pay your auto insurance premium is to pay it all at once in a lump sum. By doing this, not only do you avoid having to shell out money each month, but you also avoid the monthly service charges that insurance companies tack onto your bill for the right to pay in installments. This service charge can range from $3 to $10 or more per month and can add $60 or more to the total cost of your premium. Paying in lump sum lets you avoid this hidden charge.
Because not every driver has the cash on hand to pay for their premium at once, insurers offer payment plans. They divide up your six-month premium into monthly installments, letting you pay basically a sixth of it every month. For the benefit, they charge a monthly service fee that adds to your total cost. Paying in installments is good if you cannot cover the entire cost up front, but know you will end up paying more than is listed on your policy.
Auto insurance payments can be made one of two ways—up front in one lump sum or month to month. There are costs and benefits to both methods. If you can afford it twice a year, it makes sense to pay in full. If not, a monthly payment plan offers you flexibility over the period of your coverage.
If your car is ever stolen, deciding whether or not to continue to pay insurance premiums is probably not high on your priority list for obvious reasons. It is vitally important to consider a few key points regarding your insurance coverage prior to deciding whether or not to continue your auto insurance payments.
Until you report the car stolen, to the law it appears there is no crime. Thus if your vehicle is in an accident, you can still be held responsible for any damages to property or physical harm that befalls another driver. Continuing to pay insurance premiums will cover you in the event that the thieves are in an accident while taking your car for a joyride.
If you happen to discontinue auto insurance payments while your car is missing and then you DO happen to get it returned, you could be charged an increase in coverage due to a “lapse in coverage.” A lapse in coverage simply means that your vehicle was operated without coverage for a time and this can lead to an increase in your premium payments under many auto insurance rules.
Many financing companies require your vehicle have full coverage when still financed, thus if your car is stolen and you drop coverage you could be charged penalties by your financing company until the car is determined lost or is returned. It is best to keep your car insurance company and financing company in the loop while the investigation is taking place, as this will help to reduce any penalties charged by either company.
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Stay in close touch with your insurance company if you are the victim of an auto theft as many car insurance terms will have provisions for the liability of a stolen car. They can help you pay damages, cover the cost of the stolen vehicle, and even assist in alternative transportation while the investigation is taking place.