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How you pay can save you money

Penny Gusner


Insurance cardYou have an opportunity to continue saving even after you’ve comparison-shopped for a new car insurance policy.

Paying in full, or early, or doing business online can result in additional discounts with many car insurance companies.

The flip side: If you decide to pay your car insurance premiums in installments, expect to pay for the privilege. Most insurance companies charge extra for monthly plans. Some of them charge a lot –$100 or more a year -- and that amount won’t be reflected in their rates when you are comparison-shopping.

Here are the payment discounts to look for.

Pay in full discount

Typical discount is 5 percent to 10 percent. The average for all states is about 4 percent.

Available to: Drivers who pay their car insurance policy premium up front and in full.

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Caveats: Need to pay before the policy effective date to receive the premium reduction.

Length:  Renewable at beginning of each new policy period if you pay in full.

Early renewal discount

Up to 5 percent discount. The national average is about 3 percent.

Available to: Drivers who renew their policies at least seven days in advance. Some insurers may require 10 days in advance.

Caveats: Not available in all states.

Length: Renewable at each policy extension.

Electronic funds transfer (EFT) discount

Up to 5 percent discount. The national average is about 2 percent.

Available to: Drivers who authorize automatic electronic funds transfers by their insurance carriers from their checking accounts.

Caveats: Not available in all states. Not for drivers without a financial cushion or overdraft protection. Insufficient funds could result in a lapsed policy unless dealt with quickly.

Length: Renewable at each policy extension.

Going green / paperless discount

Generally up to a 5 percent discount.

Available to:  Drivers who sign up to access their account online and receive documents online instead of paper documents can receive the discount. 

Caveats:  The driver may also be required to set up online billing and automatic payments to receive the discount. While you’re at it, you may as well arrange to receive your proof of insurance electronically, too, now that most states accept insurance cards presented on your smartphone.

Length: One-time discount with some insurers, ongoing with others.

Online discount

Normally a discount of around 5 percent

Available to:  Drivers who start their quote online and/or buy auto policy online with their insurer.  

Caveats:  May also need to select online billing and set up automatic payment by electronic funds transfer to receive the discount with some insurers.

Length: Typically a one-time discount.

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