Paying By Installments

By Author: Marcus Stalder
Total Articles: 491
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In all but three states like Virginia, there are laws requiring you to carry insurance when you drive a vehicle on a pubic road. This is a simple measure to ensure there's always a minimum amount of cash available to meet third party claims should your bad driving injure someone or damage their property. Unfortunately, the number of people driving uninsured has been rising steadily in all states, the rate increasing quite sharply as we have come into the recession. With an increasing number of people now unemployed for six or more months, family budgets will not pay for annual policies. For 2010, the Insurance Information Institute estimates that at least 18% of the drivers on the road are uninsured. This gives you bad odds on being involved in an accident with an uninsured driver. Sadly, a big percentage of the remaining drivers are probably underinsured, i.e. the amount of the coverage is unlikely to meet all your losses. Only the wealthy and those with auto loans will be carrying more realistic levels of insurance.

Against this background, more insurance companies are now offering coverage on installment plans. These ...
... are usually three, six or twelve months. But before you launch your search for these insurers and sign up, there are a number of issues to beware. The first is the right of the insurers to cancel the policy. When you have paid a lump sum for your coverage, the insurer cannot simply walk away from the deal. There will be limits on the right to terminate. But if you're paying on an installment basis, all these protections disappear and the insurer will be free to cancel if you're even one day late in making an installment payment. Always read the small print on this before buying to find out when the insurer may cancel and what happens if you make a late payment after cancellation.

Then look very carefully at the amount of interest and any fees and charges loaded on to the amount of the premium. Sometimes the total payable at the end of the term of the coverage is a massive percentage increase. Do sums and make sure you cannot afford to pay a lump sum for six or twelve months. This can represent a real saving. The final issue is the amount payable up front. All these policies have at least one month payable in advance. That means the insurer always has some cash from you before you put wheels on the road. But many states have formal laws requiring the payment of two or more months in advance. This protects the insurers but also raises a real barrier to the unemployed to pay. This is not something you can negotiate. If that's the law, you're caught by it.

To find the best installment deals, you need to get as many auto insurance quotes from as many insurers as possible. You're looking not only for the installment plan but also for a good deal on the terms of the coverage. Just because the auto insurance policy is affordable does not make it good value for money. Always read the small print and work out the costs before you buy.