Monthly Car Insurance Plans

Last Updated on October 27, 2020

For most of us, the most important factor in choosing an auto insurance company is the dollar sign. The cheaper the auto insurance coverage, the better – nothing is more straightforward than that. Chasing after the cheapest coverage magically simplifies the selection process; to know which insurance to go for, just chose the policy with the lowest premiums!

Unfortunately, things aren’t always that simple. Sure, paying low premiums is something you should strive for, but are you sure you want to increase your deductibles just to reduce premiums? Do you have the ability to pay for your deductibles if you get into an accident? Do you really want to lower or drop that coverage just to reduce premiums?

Many questions need to be answered before you can make an informed decision regarding which auto insurance plan to go with. However, we won’t look at all of them here. For now, let’s just look at monthly car insurance plans and how they can save you money if bought under the right circumstances.

Table of Contents:

What Are Monthly Car Insurance Policies?

Monthly car insurances simply refer to the payment of auto insurance premiums by the month. Most policies cover a period of three, six, or twelve months, and most of these policies require the client to pay for the coverage at the end of the period of coverage.

What most people don’t know, however, is that some insurers also offer an option for clients to pay monthly.  By doing this, you are simply given the option to pay at the end of each month instead of putting up one entire chunk of payment at the end of the period of coverage.

Advantages of Monthly Car Insurance

Flexibility – Monthly car insurance plans allow clients to pay more flexibly. If the clients want to change insurers, they do not have to wait until their coverage period is up – they can switch insurers immediately (or at least at the end of the month)!

Less Financial Commitment– Monthly car insurance policies allow clients to spread out their financial burdens over a more extended period of time. Often, many clients find it a little straining to cut up a large part of their finances at the end of every year just to pay for their auto insurance. Paying month-on-month allows these lump sums to be cut up into bite-sized chunks, making it more manageable for clients to pay.

“Preview” Insurance Policies – Because you’re allowed to move to another insurer within the month, you can use month-on-month auto insurance payment plans to “test-drive” a policy. You can always switch to an annual payment scheme at a later date.

Disadvantages of Monthly Car Insurance

Higher Premiums – Monthly car insurance plans usually amount to a higher premium paid over the lifetime of the policy. The reason for this is because insurers understand that clients can terminate their contracts at any time. Therefore, it is a little less profitable for insurers to insure clients that are on month-to-month car insurance policies.

Lack of Benefits – Often, monthly car insurance policies don’t come with good benefits and perks, such as roadside assistance and free rental reimbursement coverage. This lack of benefits and add-ons is one of the main reasons most people opt for longer car insurance policies.

Missed Payments – There are times when clients accidentally forget to pay for their monthly car insurance plans. This might cause the insurance policy to lapse or terminate prematurely – and that means you’ll suddenly be driving without coverage just because you paid the premiums one day too late.

How Much Does Car Insurance Cost per Month?

Auto insurance rates vary greatly by state. As you may know, different states have different rules and requirements. Michigan, for example, consistently is one of the most expensive states to insure a car due to its “no-fault” laws. States like Wyoming and Alaska, on the other hand, have lower rates due to laxer regulations.

To get an idea of how much your auto insurance will cost per month, view the table below to find your state. These rates are for the minimum amount of insurance required by the state for a driver with good credit and good driving history.

StateAverage Monthly Premiums for Minimum Coverage
Alabama$27
Alaska$35
Arkansas$33
Arizona$41
California$41
Colorado$42
Connecticut$63
Delaware$67
Florida$74
Georgia$44
Hawaii$46
Iowa$25
Idaho$27
Illinois$32
Indiana$33
Kansas$33
Kentucky$62
Louisiana$59
Massachusetts$45
Maryland$59
Maine$30
Michigan$168
Minnesota$48
Missouri$34
Mississippi$33
Montana$27
North Carolina$29
North Dakota$30
Nebraska$27
New Hampshire$40
New Jersey$56
New Mexico$35
Nevada$52
New York$68
Ohio$32
Oklahoma$37
Oregon$57
Pennsylvania$40
Rhode Island$63
South Carolina$40
South Dakota$22
Tennessee$34
Texas$39
Utah$44
Virginia$31
Vermont$28
Washington$39
Washington, D.C.$62
Wisconsin$31
West Virginia$41
Wyoming$28
Source - Insure.com

How to Save on Monthly Car Insurance Plans

Even with a monthly car insurance plan, you can pay discount rates for car insurance. Having a month-to-month car insurance policy does not require you to pay higher premiums.

In fact, some month-to-month customers pay just 2% to 3% higher rates than annual or semi-annual policyholders.

Some drivers pay virtually identical rates, enjoying the flexibility of a month-to-month plan with the flexibility of a long-term plan.

Some of the strategies for saving on monthly car insurance plans include:

Bundling Discounts: You can bundle car insurance policies together on monthly plans to save 10% to 20%. If you have homeowners insurance, life insurance, motorcycle insurance, or other policies with one company, then your insurer should give you a discount across all policies.

Multi-Vehicle Discounts: If you insure multiple vehicles with one insurance company, then you could save money on all insurance policies. As long as multiple vehicles are insured with the same company and registered at your address, you should qualify for multi-vehicle savings.

Shop Around: As a monthly car insurance policyholder, it’s easy for you to shop around and switch providers. Shop around regularly and switch insurers if you find a better-rated option at a lower price.

Good Student Discounts: If you maintain an average of B+ or better in high school or college, and you are under age 25, then you should qualify for a good student discount with most insurance policies, even when following a monthly car insurance plan.

Raise your Deductible: A typical car insurance deductible on a monthly insurance plan is $500 to $1,000. However, some drivers raise their deductibles to lower costs. Raising your deductible could drop car insurance premiums slightly.

Adjust or Lower Coverage: If you have an older vehicle, you could drop comprehensive and collision coverage to significantly lower premiums. You lose coverage for car repairs, but it matters less on older vehicles because of their lower value. Dropping comprehensive and collision coverage could lower premiums by half.

Improve your Credit Score: Your credit score impacts car insurance premiums. Drivers with a lower credit score are riskier to insure than drivers with a higher credit score. If you have a bad credit score, then you can improve that credit score to lower insurance premiums.

Change your ZIP Code: Your ZIP code impacts car insurance rates significantly. If you recently moved from a safe area to a high-crime area, then your insurance rates could rise due to a higher risk of theft, vandalism, and other vehicle-related incidents.

Use Low Mileage Discounts: If you drive fewer than 6,000 miles per year, then many insurers offer a low mileage discount. You drive significantly fewer miles per year than the average driver, which means you’re less risky to insure. Expect to pay lower car insurance premiums as a low mileage driver, even with month-to-month car insurance policies.

Which Companies Have the Best Month-to-Month Insurance?

All major car insurance companies in the United States offer month-to-month car insurance. The best-rated car insurance companies for month-to-month car insurance also tend to be the best insurance companies overall.

The car insurance companies below are the best-rated insurers for month-to-month car insurance in terms of value, customer service, claims satisfaction, and other factors:

  1. USAA: $54 per month
  2. GEICO: $68 per month
  3. Progressive: $72 per month
  4. Allstate: $74 per month
  5. State Farm: $79 per month
  6. Farmers: $82 per month
  7. Nationwide: $83 per month
  8. Erie: $93 per month
  9. The Hartford: $106 per month
  10. Amica: $107 per month

All prices above are per month for full coverage car insurance, which includes collision and comprehensive coverage.

Auto insurance premiums vary widely across the United States. Policyholders in the cheapest states pay as little as $50 per month for full coverage car insurance, while policyholders in more expensive states may be unable to find policies below $200 per month. Compare quotes to find the best month-to-month car insurance policy for your needs.

What Are Some Alternatives to Monthly Auto Insurance Plans?

Most drivers in the United States use monthly auto insurance plans, paying their car insurance company every month in exchange for coverage. However, alternatives exist.

Alternatives to monthly auto insurance plans include all of the following:

Annual or Semi-Annual Plans: If you don’t want a month-to-month insurance plan, then you have two other main payment options, including annual or semi-annual plans. Some car insurance providers let you pay once per year or once every six months. Depending on your financial situation, an annual or semi-annual plan may be the right choice for you.

Surety Bond: Some states allow drivers to purchase a surety bond to insure a vehicle. With a surety bond, you deposit money with the DMV or a licensed business. Typically, this deposit is equal to the required amount of liability insurance in your state ($15,000 to $50,000, depending on your state).

Driving Without Insurance: Driving without insurance is illegal in every state except two: Virginia and New Hampshire. If you live in Virginia or New Hampshire, you may be able to legally drive without insurance, although you are still liable for any damage you cause (and you may need to file special paperwork with the DMV or pay a non-insured fee before driving).

Short-term Car Insurance: Most insurance companies allow you to buy short-term car insurance. Short-term car insurance works similarly to ordinary car insurance, but you cancel your policy when you no longer need it. Most insurance companies let you easily cancel car insurance and receive a refund when you no longer need it. You should easily be able to obtain short-term car insurance with any provider.

No Down Payment Insurance: No car insurance company technically allows car insurance with no down payment, although some insurers are more flexible with down payments than others. By shopping around, you could find car insurance with a low down payment and flexible payment options.

Non-owner Insurance Policies: If you do not own a car but want to maintain insurance coverage, then you could buy a non-owner policy. You might buy a non-owner policy if you regularly drive a friend’s vehicle, for example, or if you want to add coverage to your rental car. Non-owner insurance policies could help ensure adequate coverage similar to month-to-month insurance policies.

Bare Minimum Liability Insurance: If you only want the bare minimum legally required car insurance in your state, then you can buy that policy from any insurer. All major insurers offer bare minimum liability insurance policies, allowing you to legally drive on the road and cover damage to other drivers – without paying too much for car insurance.

Final Word on Monthly Car Insurance Plans

All in all, different people have different views on whether to get monthly car insurance. To understand whether you truly need this kind of insurance, you must understand your wants and needs before making a decision.

After you’ve decided that a month-to-month insurance policy is right for you, start looking for quotes. At Insurance Panda, our quote generator will help you find out the best deals in your area. Just enter your zip code, and we’ll connect you to local insurers offering competitive monthly rates.