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


Yes, when you purchase a car insurance policy, you may have to put down at least some of the total annual cost through a deposit, or down payment, in order to start your policy.

Stephanie Nieves author photo


Stephanie Nieves

Stephanie Nieves

Editor & Home and Auto Insurance Expert

Stephanie Nieves is a former editor and insurance expert at Policygenius, where she covered home and auto insurance. Her work has also appeared in Business Insider, Money, HerMoney, PayScale, and The Muse.

Updated December 21, 2021 | 4 min read

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Car insurance is financial protection for you and your vehicle, and covers you in case you cause an accident or your vehicle is damaged. 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.

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You can choose to pay car insurance premiums on a monthly basis or for the full year up front. 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.

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.

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

What is a car 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.

Paying for car insurance coverage is unavoidable. The best way to find the cheapest car insurance 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.

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 analysis of car insurance rates by Policygenius,the average cost of a full coverage car insurance policy in the U.S. is $1,652 per year (or about $138 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 $250 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.

Frequently Asked Questions

When is the first car insurance payment due?

Your first monthly payment is due on the same day of the month that your policy started. For example, if your original policy start date was January 5th, your monthly payments would be due on the 5th of each month.

What are my options for car insurance payments?

You can pay your premium in monthly increments or every six or twelve months when your policy renews. If you decide to pay in monthly increments, the amount you’ll pay will be your premium divided by twelve months. If you pay your premium in full for six months or the whole year, you’ll typically be rewarded with a discount, which means it may be cheaper in the long run to pay in full.

Do you have to pay for car insurance every month?

If you’re paying your premium in monthly increments, then yes, you have to pay for car insurance every month. But you can also pay more than your minimum at a time. For example, if your monthly premium is $150, you can pay more than that amount and your remaining balance may be distributed across the rest of your policy term, meaning that your monthly payments will be cheaper. Every car insurance company is different, though, so you should check with your carrier to see how they handle monthly payments.