When is it a Good Idea to Pay Monthly Car Insurance Payments?
Insurance can be a confusing field to navigate. There’s an abundance of policies, insurance providers, payment conditions, claim processes and many other mind-bending features to consider. One of those items to factor into your choice of policy is the payment method. Some policies might incur weekly fees, monthly fees, annual fees and even a mixture of all the above. When trying to choose which payment method works best for you, it can be a great idea to examine when paying a monthly premium may be beneficial.
In this article, you can discover what it means to pay monthly car insurance payments, view the alternative payment methods, examine if monthly payments are worth it and explore the typical prices affecting payments. Hopefully, by the end of this article, you may feel more comfortable choosing a car insurance policy that’s right for you.
What does it mean to pay monthly car insurance?
So, what exactly does it mean to pay monthly car insurance payments? It means you’re billed at the end of each month. You typically pay premiums and administration fees at the end of each month. Car insurance premiums are generally annual policies or annual contracts, so you’re essentially paying down your policy over the length of the term. Many standard insurers require policyholders to make annual lump sum payments, while some providers may offer a monthly payment option.
One thing to note is that monthly payment options may, in some cases, involve increased premiums because a policyholder who pays on a monthly basis may be seen as more of a risk to the provider. There’s far more to it though, and, of course, not every insurance provider increases costs for monthly payments. Many insurance providers may give you a monthly payment option with no additional fees or premium increases. There are also some innovative providers out there who combine monthly payments with annual fees and a pay per kilometre rate, also known as a pay as you drive (PAYD) policy.
What are the typical payment methods?
When examining monthly insurance payments, it’s helpful to look at other payment methods. You might determine certain methods are more beneficial for your financial situation. It can be important to note that not every insurance provider offers varying payment options. Some providers might only have one option available.
Below, you can find some details on the typical payment methods for comprehensive insurance.
- Fortnightly: This payment method means you pay every two weeks. Paying fortnightly can sometimes come with increased premium fees and administration fees even higher than monthly payments.
- Monthly: This is usually a standard payment option where you’re billed at the end of a month. Similar to fortnightly payments, this could incur increased premium costs and administration fees. Depending on your insurance provider, it might be a more expensive payment method to maintain in the long run.
- Annually: Usually the most common payment option, an annual payment, might be more economical. At the start of your policy and each renewal stage, you pay a year’s worth of fees. This can be a substantial amount, though, so not everyone has the financial capabilities to choose this option.
- Pay as you drive: Depending on the insurance provider you choose, a PAYD policy may be more economical and offer the option to pay annual payments, while still offering you the option to pay monthly. A PAYD policy usually charges you a fee based on the kilometres you travel. So, if you rarely use your vehicle, you might pay a reduced premium for your insurance. A PAYD insurance policy is also usually comprehensive car insurance. So you might pay less while reaping the benefits of comprehensive cover.
Is a car insurance monthly payment the best option?
Like many insurance decisions, this one can be subjective. A monthly payment option might be best for you if you can’t afford an annual payment but require insurance. On the other hand, if you’re financially comfortable, you may feel commit to paying annually is better, as it generally involves reduced premiums. You might think, ‘what if I pay for a year’s worth of insurance but cancel my policy halfway through?’. Most policies have cancellation conditions where they refund the remaining unused insurance payments after the cancellation date. It’s best to check the insurer’s product disclosure statement, as it usually details cancellation conditions.
What prices can affect car insurance premiums?
If you’re wondering how an insurance provider calculates your car insurance premium, the answer is that they use an abundance of factors. Below, you can find the typical elements that contribute to your premium fees:
- the agreed value of your car
- where your car lives
- the make and model of your car
- your age and gender
- history of your claims
- how you use your car
- finance options on your car
- government charges, such as GST
- incurred expenses specific to your policy
Making KOBA payments
If you’re a policyholder with KOBA Insurance, paying your premiums is easy. KOBA is a digital-first company, we don’t ‘mail’ your invoice or insurance certificates or renewal reminders like some traditional insurance companies might. As a policyholder with KOBA, you can connect your credit card directly to your insurance account. This means you don’t have to worry about organising monthly payments and entering credit card details each time you pay. Payments are automatically deducted from your card each month.
Why KOBA offers the best of both worlds
KOBA Insurance offers a Comprehensive Car Insurance Pay as You Drive policy where you can commit to a monthly direct debit. The way our system works is that you have two premiums to pay; an upfront fixed premium and a monthly driving premium. The fixed premium is actually an annual fee to cover your car while parked, while the driving premium is where you can make monthly payments and covers your car while you’re driving. KOBA’s pay as you drive car insurance policy means the less you drive, the less you pay.
You can get your car insurance quote online and explore all that KOBA Insurance has to offer.
Any advice provided on this site is general advice only and does not take into account your individual needs, objectives or financial situation. Terms, limits, conditions and exclusions apply. Before making a decision, you should carefully read the Product Disclosure Statement & Financial Services Guide (PDS & FSG), and the Target Market Determination (TMD), which are available at kobainsurance.com.au to help you decide if the product is right for you. If you purchase a policy, KOBA receives a commission, which is a percentage of your premium, and may be entitled to a profit share if certain thresholds are met in agreed periods. Please ask us for more details.