Original author: Ellie McLachlan
There are generally two ways you can choose to pay for your car insurance policy: either annually or monthly. At the time of writing, Canstar Research shows that about half of the car insurance providers on our database (depending on the state or territory you live in) allow policyholders to pay monthly at no extra cost.
Choosing to pay annually may mean that you have a wider range of providers to choose from, as some car insurers only offer annual payment options. Canstar compares a range of over 50 comprehensive car insurance policies, and you can choose to just shop among policies that allow you to pay monthly at no extra cost.
Making your car insurance payments monthly
While paying a monthly premium for your car insurance could potentially be more convenient and manageable than paying annually, it’s worth noting you could actually end up paying a higher total premium every year. It’s not necessarily as simple as splitting your annual cost into 12 monthly payments.
Additionally, if you choose to pay monthly, it may be worth checking if you’re still committing to a 12-month payment contract, or if the policy allows you to pay-as-you-go or pay monthly and cancel at any time. Unless the provider stipulates that their product is a pay-as-you-go policy, you will most likely be committing to the same 12-month insurance policy that you would be if you’d chosen to pay annually.
Providers may charge you an extra fee, such as a regular admin fee, for the privilege, and you may also be charged a higher base premium. That’s why it is important to speak to your insurer or read your policy’s Product Disclosure Statement (PDS) to ensure you’re aware of any extra costs that may be associated with paying monthly.
Paying for your car insurance annually
Paying for your car insurance upfront in one lump sum a year may have its own benefits, such as not having to budget for ongoing payments for the rest of the year, and potentially paying a lower total premium than if you paid monthly.
Paying for car insurance on an annual basis is the default payment option offered by most providers, but some may offer the option to split that annual cost into monthly payments. It may benefit you to ask how much of a discount your insurance provider might give you for paying annually, as that could factor into your decision.
You can use our car insurance comparison tables to generate a comparison of car insurance policies based on your circumstances, and whether or not you’d prefer to pay monthly rather than annually.