Most people consider the cost of insurance when buying car insurance. The cheaper the car insurance, the better. After opting for cheap insurance, you may then need to agree to pay a high deductible and all other add-ons that come with it. Additionally, the insurer may want you to pay for the insurance quarterly, bi-annually, or annually.
What if you can’t afford to buy the biannual or yearly insurance? Are there alternatives to paying the full annual insurance payment at once? This is where month-to-month insurance comes into the picture.
What Is Month To Month Car Insurance?
Month to month, insurance is also called a monthly insurance policy.
Instead of paying for your car insurance as an upfront large quarterly, biannual, or annual premium upfront, you can opt for a month to month policy. A monthly policy is an insurance that you’ll pay every month over an agreed-upon number of months, usually three, six, or twelve equal payments.
Most insurance companies schedule month to month payments to be due at the end of the month. However, there can be instances when your provider can give you the flexibility to pay it when you need it.
Month to month, insurance does not exist in the U.S. laws of insurance. Some insurance companies, having noted that some people may need insurance on a monthly basis, provide month to month insurance to support those in need. Additionally, the shorter the insurance policy’s duration, the fewer the discounts a provider will offer on monthly premiums.
Who Needs Month To Month Insurance?
There are some instances or variations where one may need temporary car insurance, and where month to month car insurance may apply:
- When one is buying car insurance for a rental company
- Six-month insurance contract with no cancellation fees
- Adding another car onto an existing insurance policy for a short time period
- Bundled family plans
- Discounted car insurance for students or military members, such as students on
- summer vacation
- Relocation – when you recently move states and need temporary car insurance as you settle. Month to month car insurance may give you ample time to settle in the state as your search for a long term insurance solution for your car.
Why Opt For Month To Month Insurance?
Apart from giving you the freedom of paying insurance on a monthly basis, and not paying a huge amount of money at once, there are some other things that you can enjoy when you select a month to month car insurance:
- Flexibility – month to month car insurance gives more flexibility in payment plans. If you want to change your insurer (or your client wants to change their insurer), you can do so immediately without having to wait until the end of the coverage period.
- Less Financial Commitment – with a month to month insurance policy, you’ll be able to spread out your financial burdens over an agreed period of time. Paying month to month allows you to cut lump sums of insurance cost into more manageable, bite-sized chunks.
- “Preview” Insurance Policies – you can use your month to month insurance policy as a preview policy as you continue shopping for a more suitable insurance policy that satisfies your needs. You can then switch to an annual payment policy at a later date.
- Relocation to a new state – if you just relocated to a new state and you’re still not sure of the state’s requirements and demands regarding insurance, a month to month insurance can be your best bet as you settle down.
What Are The Downsides Of Monthly Car Insurance?
Even with the positives that come with month to month insurance, here are some of the downsides that you may expect:
- Higher Premiums – insurers charge higher premiums on monthly car insurance plans because they understand that you may want to terminate the contracts at any time. Insurers simply try to insure your insurance with them.
- Lack of Benefits – when you opt for month to month car insurance, you lose numerous benefits such as insurance discounts and deductibles.
- Missed Payments – if you forget to pay your monthly insurance, you’ll be driving around without insurance.
How Much Is Month To Month Insurance?
There is no fixed price for month to month car insurance. Many reasons may affect the cost of your month to month car insurance, including:
- Your state
- Insurance company
- You cars age, type, and model
- Your age, gender, and driving record
- You credit score
There are also plenty of other local factors that will influence your month-to-month care insurance cost, such as:
- Your street
- Your accident rates, and partly claim record
- How you store your car
- Moving to a new neighborhood
Your insurer will use a combination of these factors to determine the cost of your month to month insurance policy. On average, month to month car insurance is more or less $110 per month. This figure varies by state and by company.
In addition, most carriers usually offer refunds on car insurance if you move to an area that lowers your rate, or if you cancel early. It is also important to check out with your insurance company on what benefits you may get on the month to month insurance.
Are There Alternatives to Month To Month Insurance?
If you’re not certain whether or not month to month car insurance is a good choice for your current situation, there are several other alternatives. Depending on your present situation, there are other solutions to getting a temporary car insurance policy, including:
- Usage-based car insurance: if you don’t drive your car often, you can opt for usage-based car insurance to save money. You’ll set your premium based on your predicted schedule when your car is in use.
- Rideshare insurance: if you are using your car for a gig, such as Uber, Lyft, or food delivery, you can opt for month-to-month or rideshare car insurance to supplement your care insurance plans.
- Rental car insurance: there are many options for rental car insurance in the U.S., such as PIP, collision damage waiver, personal effects coverage. These plans can be better options than month to month insurance.
These alternatives are particularly applicable if you know you need temporary car insurance, and you’re willing to sign a car insurance contract for at least six months. You may also need to have the money to pay the entire insurance policy upfront for you to get some good discounts.
Note: Before buying supplementary insurance plans, check if you really need it. These alternatives, more or less, work the same as month to month insurance. You need to be keen and select the best fit for your needs.
You may have your reasons for searching for a suitable month to month insurance. To understand whether or not you truly need month to month car insurance, you must understand your specific car insurance needs before making a decision. If you feel it is the right fit for you, you can look for quotes from different insurance providers.
However, month-to-month car insurance may appear flexible and cost-effective but may be subject to many factors such as the state and the insurance company.