Setting up an automatic payment option on your car insurance policy may be a good idea. As long as there’s always enough money in your account, you never have to worry about policy lapses or late payments.
Are there automatic payment options for car insurance? How can you setup auto-pay on your car insurance policy? Today, we’re explaining everything you need to know about automatic payment options and car insurance.
Available Automatic Payment Options for Car Insurance
First, there are multiple payment options for car insurance. Depending on your insurance company, you may be able to setup automatic payments for one or more of the options below:
Electronic Funds Transfer: You can authorize your insurance company to complete an electronic fund transfer from your checking or savings account every month. This authorizes your insurance company to withdraw a single, fixed payment on a monthly basis. This is one of the most popular ways to pay for car insurance.
Online Bill Payment: Some insurance companies have setup online bill payment portals. You login to this portal, then pay your insurance premium. Sometimes, these portals come with automatic payment options.
Bank Card or Credit Card: Some insurance companies let you automatically withdraw payments from your credit card or debit card. In this case, your payment will be processed monthly on your bank card.
Direct Pay: Some insurance companies offer direct pay, where you can pay using your choice of check, cash, debit, or credit card. You get a bill every month and can choose how to pay it. Out of all the options on this list, this is the one least likely to support automatic payments.
Other Methods: Different car insurance companies have different payment methods available. GEICO lets you write an online check, for example. Many major insurance companies – including GEICO and others – also let you pay using your mobile app. There’s a GEICO app, for example, where you can make a payment with just a tap.
Typically, all of the above payment methods allow for payments annually (every 12 months), semi-annually (every 6 months), or in 2, 3, 4, 5, or 6 installments.
How to Setup Automatic Payments
It’s in your insurance company’s best interests to setup automatic payments. They like getting paid on-time every month, and they don’t want to chase you for payments all the time.
That’s why most insurance companies make it really easy to setup automatic payments. Just login to your online account to get started. You may have to call your insurance agent – but in most cases, it’s a simple process of logging into your account online.
You might actually get a small discount for setting up automatic payments. Some insurance companies reward customers with cash in exchange for setting up online payments, for example.
Advantages of Automatic Payments
Some of the advantages of setting up recurring, automatic payments on your car insurance policy include:
- You don’t have to remember to make a payment every month
- You can avoid the risk of having your policy lapse
- You get peace of mind knowing that your car insurance is up-to-date every time you see the money charged from your account
- You can avoid late fees and other penalties
Disadvantages of Automatic Payments
Automatic payments aren’t necessarily a good thing. Some of the disadvantages of automatic payments include:
- If you don’t have enough money in your account when your insurance company attempts to withdraw it, then you might have to pay an overdraft fee
- You might get too comfortable with your automatic payments; instead of seeing a real bill every month, you just see a certain amount get deducted from your account, which could make you less likely to want to compare auto insurance quotes (this is one reason why auto insurance companies prefer customers making automatic payments – it makes them less likely to switch away!)
Ultimately, most of today’s insurance companies make it easy to setup automatic payments. It’s in your insurance company’s best interest to setup automatic payments. They get the peace of mind of knowing they’ll get paid every month. Plus, you get the peace of mind of knowing you’re covered. Login to your insurance account or call your insurance company today to setup automatic payment options for car insurance.