How to Get Very Cheap Car Insurance with No Deposit

Last Updated on August 12, 2020

Budget-minded drivers across America are always searching for very cheap car insurance with no deposit.

Drivers in any state can get cheap car insurance. Unfortunately, there’s no such thing as cheap car insurance with no deposit. It simply does not exist.

Many auto insurance providers claim that their insurance policies do not require a deposit to start coverage. What they mean by this is that no down payment or security deposit is required to lock-in your policy. In order for coverage to start, however, your first-month premium usually needs to be paid.

Unfortunately, in order for car insurance to be legal, you need to pay something in order for your policy to begin. Your car insurance is not legal until you pay for it upfront. Without that deposit – your initial insurance payment – you do not have legal car insurance. Without legal car insurance, you cannot legally drive on roads in any state.

Yes, a quick Google search will reveal several companies that appear to be offering to sell you cheap car insurance with no deposit. These companies might seem to promise exactly what you want. However, there’s no way around the deposit rule.

get very cheap auto insurance with no deposit

Why Can’t I Buy Car Insurance with No Deposit?

In order to buy car insurance with “no deposit”, you need to be able to purchase that insurance without paying any money upfront – either whole or in part.

Car insurance, in order to be legal, requires at least some type of payment upfront before you’re covered. All car insurance policies in all states require some type of initial payment. This isn’t always a “deposit”. Typically, your first insurance payment installment is enough to activate your insurance policy.

Of course, not all car insurance companies require the same level of initial payment. Some companies might require the full 6 to 12 months of payment upfront, for example, while other companies might just require a single month’s payment. That’s considered your “deposit”.

Paying a one-time annual or semi-annual fee for your insurance is typically cheaper. However, most insurance companies split insurance payments into a monthly fee. That monthly fee is slightly more than you’d pay if paying annually or bi-annually – but it also means you don’t have to maintain a large chunk of cash in your bank at a certain time of year.

Things to Look at When Shopping for Cheap Car Insurance

Shopping for Cheap Car InsuranceRemember that the cheapest auto insurance policy rarely offers the best coverage. If you are looking to save money by hunting for low-cost insurance without a down payment, realize that you might sacrifice the quality of coverage and customer service in your hunt. To prevent buying insurance from a disreputable company, do your homework first to make sure the company you sign on with doesn’t disappear when you go to make a claim.

There are a variety of resources both online and offline that can help you find a reliable auto insurance provider.

How to Find a Reputable Auto Insurance Company:

  • Check the Major Publications – Compare and contrast insurance companies by reading more about them online. Places like JD Power and Associates provide in-depth claim satisfaction ratings for each company. If you want to check out an insurance company’s financial strength, it’s best to read reviews from AM Best or Moody’s.
  • Read Customer Reviews – As stated above, low cost, no deposit auto insurance plans rarely have the best customer service. To avoid an abysmal experience, however, you should still try to find a company that doesn’t score too poorly when it comes to customer service. Check to see if the company has a dedicated customer service phone number with normal business hours. Also, read customer reviews on places like Consumer Reports and Nerd Wallet to make sure no red-flags or nothing too alarming jumps out at you telling you to “stay away!”
  • Ask Friends and Family – If somebody you know has a good experience with a specific auto insurer, feel free to get quotes from them. Often, insurance rates are local, so if a certain insurance provider can provide your friends or family members with low rates, they might be able to get you a good rate as well.

Will My First Insurance Payment Be Higher than the Rest?

So you’ve accepted the fact that “no deposit” car insurance plans do not exist in the way you initially assumed. You’re ready to pay your insurance plan’s monthly fee upfront before your car insurance is active.

But is your insurance plan really split into 12 equal monthly payments? Or are you required to make a larger payment for your first month?

This is where things vary between insurers. Companies tend to charge a slightly higher amount on the first payment. You can almost always expect your first installment to be higher than your other monthly installments.

Fortunately, your insurer will carefully explain this information upfront. Your insurer will explain how the cost will be spread across the year. Make sure you get a breakdown of payments to avoid any nasty surprises in the future. If the insurer doesn’t offer this information upfront – then just ask for your payment schedule.

What Happens If I Still Can’t Afford Insurance?

So money is tight. You can’t afford to pay any money upfront for car insurance – but you still need insurance.

Unfortunately, there’s no way around the “no deposit” rule. You simply need to pay something upfront in order for your car insurance to be legal.

Aside from robbing a bank, you can talk with your auto insurance agent and work with them to see what options you have to lower your rates. Lower your insurance costs by opting for the bare minimum coverage. Each state has specific rules about the lowest minimum liability coverage required by law. You’ll need to meet that minimum to drive legally – but you don’t have to go above that minimum. You can get rid of comprehensive and collision coverage to significantly lower the costs of your insurance, for example.

Conclusion: Low Deposit Car Insurance is Available in All States

No deposit car insurance simply does not exist. There’s no such thing as car insurance where you don’t have to pay anything upfront. Fortunately, you won’t have to pay anything extra in order for your auto coverage to begin. You’ll simply need to pay your first month of premiums.

Getting Low-Cost Insurance Immediately

If you’re low on cash but need car insurance today, you have two real options:

  • Pay the first installment of your car insurance plan (which will be slightly higher than your ordinary monthly insurance installment)
  • Choose the cheapest legal car insurance in your state (each state has minimum liability coverage requirements)

Ultimately, “low deposit” car insurance is absolutely a thing – but unfortunately, “no deposit” car insurance is not. Be wary of companies that claim to offer no deposit car insurance to you. You’ll always end up paying something upfront. You’re better off waiting until you can afford the first installment of your car insurance.

James Shaffer
James Shaffer James Shaffer is a writer for and a well-seasoned auto insurance industry veteran. He has a deep knowledge of insurance rules and regulations and is passionate about helping drivers save money on auto insurance. He is responsible for researching and writing about anything auto insurance-related. He holds a bachelor's degree from Bentley University and his work has been quoted by NBC News, CNN, and The Washington Post.
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