Paying Your Premiums: Tips and Advice

What is an auto insurance premium?

An insurance premium is the money you pay to your auto insurance company monthly or semi-yearly to buy and maintain your insurance policy.

Keep updated on your insurance premiums

It is important to keep track of when your policy ends and needs renewing. Auto insurance companies should send reminders to their clients, but being aware of when your policy is up for renewal gives you a chance to consider your policy’s benefits and determine whether you need to upgrade your plan. Insurance companies can also change your premium at any time, so keeping tabs on your premium is a good idea.

Pay your premium on time

Paying your premiums on time is perhaps the best piece of advice anyone could give you concerning your premiums. Insurance companies can and may cancel your policy for just one delinquent or missed payment. If your insurance lapses and you get into an accident, you will not be covered. Late and missed payments also adversely affect your credit rating. Also note holidays on which banks and the United States Post Office is closed, and plan accordingly.

Keep a clean driving record

Insurance companies may increase your premiums for reasons of their own, but at-fault accidents, a collection of speeding tickets, and other traffic law violations will certainly cause a premium hike.

See yourself as a statistic

Premiums are calculated more by using statistics than your individual driving record. Realize your age and vehicle directly affect your premium rate. Your youth and affinity for sports cars may earn you a higher premium than your older, Volvo-driving counterpart. Statistically, you’re a higher risk. The newer and more expensive the car, the higher your premium. If your income supports the higher premiums, great! If you can barely afford to buy that shiny new toy, you may not be able to afford the insurance on it. Invest a little time in shopping around for good rates or investigating the possibility of a premium hike before you make your exciting new purchase.

Consider your payment method

Because paying your premiums on time is so important, you should take a closer look at your payment method. Making payments with traditional checks is gradually becoming obsolete in the increasingly electronic age, but many do still mail off checks to pay bills. If you opt for this method, you should pay attention to the address on the return envelope your insurance companies enclose. If your payment will be delivered to an address in another state, you should plan accordingly. You’ll need to know how long it takes mail to reach its destination. In most if not all cases, your payment must be received on the due date. You may choose instead to submit your payments online directly through your bank (this may not be an option with all banks). Note that not all payments are delivered the same day, so you will need to be certain of the delivery date. If you have a difficult time remembering to make payments or travel frequently, automatic withdrawal from your bank account may be the smartest option for you.

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