Do you have to put a deposit down for car insurance?


When you purchase a car insurance policy, you may have to put down a fraction of the total annual cost through a deposit, or down payment, in order to activate your policy.

Stephanie Nieves author photo


Stephanie Nieves

Stephanie Nieves

Property and Casualty Insurance Expert

Stephanie Nieves is an insurance editor at Policygenius in New York City, specializing in home and auto insurance. Her work has appeared in Business Insider, PayScale, Fairygodboss, and The Muse.

Published May 6, 2020|4 min read

Policygenius content follows strict guidelines for editorial accuracy and integrity. Learn about our

editorial standards


how we make money.

Key Takeaways

  • Car insurance down payments are typically the first one or two months of premium payments that you must pay up front to get your policy started

  • If you choose to pay your premiums monthly, you usually must make a down payment

  • To get the best coverage at the cheapest possible rate, shop around to compare quotes and find any available discounts

Car insurance is financial protection for you and your vehicle, and covers you in case you cause an accident or your vehicle is damaged in an accident or by some other peril. You have to pay premiums in order to keep your car insurance policy in force, or active. When you buy a new car insurance policy you may have to pay a deposit or down payment before your coverage starts.

You can choose to pay car insurance premiums on a monthly basis or for the full year upfront. If you choose monthly payments, most insurance companies will require you to pay a down payment of the first one or two months of the policy in order to start your coverage; the rest of your premiums would be paid in monthly installments.

Ready to shop car insurance?

Start calculator

This type of down payment is standard for car insurance. If you’re concerned about finding affordable car insurance, there are several ways to get the best coverage at the lowest possible rate, like comparing quotes and shopping around, improving your credit score, or signing up for a usage-based insurance plan.

In this article:

What is an insurance down payment?

When you buy your car insurance policy, you have the option to pay your entire premium in full at the start of the policy, or pay your premiums monthly. Paying your premium in full makes you eligible for a “paid in full” discount, usually up to 10%. But if you can’t pay for your entire premium up front, a down payment allows you to pay less to get your policy started. The rest of your premiums can be paid in monthly installments throughout your policy term.

Generally, your auto coverage won’t begin until you’ve made your down payment, which means if you get into an accident before your insurance kicks in, you will assume the cost of the damage.

Just like the rest of your monthly premiums, this initial cost can be paid via check, credit card or debit card, and the following payments can be automatically withdrawn from a bank account on file.

Do you have to put money down for car insurance?

To put it simply, yes — you must make a payment in order for your car insurance to begin. This deposit is typically the cost of one to two months of your annual premium. But unlike traditional deposits, a down payment for car insurance is not refunded.

The best way to find the lowest deposit and premiums is to compare multiple quotes from insurance companies and choose the one that offers the best coverage at the best rates. A company that advertises “no deposit car insurance” may sound tempting, but there’s simply no such thing as free insurance. You must make a full or partial payment in order to ensure coverage, so be wary of companies that offer no deposit car insurance or the first month free.

Ready to shop car insurance?

Start calculator

How much does a car insurance down payment cost?

If you pay your entire annual premium up front, you’ll typically qualify for a discount and will not have to make a down payment. But if you don’t pay your annual premium all at once, you’ll be required to pay a down payment at the start of your policy term.

Your deposit amount will vary based on the company’s policy and your rates. Car insurance premiums are determined by factors like your driving history, the make and model of your car, and your location which are all calculated to determine your premium.

For example, someone living in a densely populated area with a few fender benders on their driving record may have to pay a higher premium than someone living in the suburbs with a clean track record. And while many of these factors may be out of the driver’s control, a history of safe driving and paying your premiums on time can still decrease the amount you’ll pay for your policy.

According to a 2021 report by the National Association of Insurance Commissioners, the average cost of what’s called “full coverage” car insurance in the U.S. is around $1,190 a year or roughly $99 per month. Rates vary widely based on a driver’s record, demographics, and how much coverage they decide to buy, but someone with an average premium could expect to make a deposit of around $190 to begin their policy.

How can I get cheap car insurance?

If you feel like you’re paying too much for car insurance, there are strategies that can help you find the best coverage for the best price. Try the following:

  • Find discounts - Bundle home and auto insurance, pay your entire premium at once, or insure multiple vehicles under one policy.

  • Improve your credit - Paying your bills on time and reducing your debt can help you save more in the long run. A credit score of 670 or above can help decrease your rate in most states.

  • Shop around - Compare quotes from multiple insurers before deciding on a policy. Seeing more options will help you find the best coverage for the lowest price.

  • Sign up for a usage-based insurance plan - Get discounts through a usage-based insurance program by allowing insurers to keep track of how much you drive, how well you drive, and when.

More about

Auto Insurance

How to buy car insurance for the first time

Choosing the right coverage and knowing how much you need can be a challenge — but it doesn’t have to be. Here’s a step-by-step guide to buying car insurance for the first time.

Read more

How to switch car insurance

Switching auto insurance providers doesn’t have to be a big deal.

Read more

Car insurance for new cars

When you buy a new car, you have to make sure you have insurance before you drive it out of the lot. And if you’re purchasing a new car, as opposed to a used one, there are some extra insurance needs you should consider.

Read more