Insurance is a necessity and can be very expensive. For most people, the use of a number of discounts can lower that cost to some degree, however, it is not always enough. One of the most common types of insurance discounts is the paid in full discount which eliminates paperwork and time for the insurance company. But, for the consumer, that means that you must pay a full six to twelve months worth of insurance premiums at one time. That can get very pricey, very quickly. Instead, some people opt to pay their insurance by the month.

The Advantage of Paying Insurance By the Month – There are some advantages of paying monthly. These include:

• Lower down payment
• Small monthly payment rather than paying a large lump sum
• Better ability to budget that expense
• Flexibility- if you have extra one month you can pay more, if you do not, you pay your regular amount. If you pay extra, it can change the next month’s payment amount.
• You can take advantage of changes in insurance laws and rates as they happen rather than waiting to the end of a term

Disadvantages of Paying insurance By the Month – There are some disadvantages as well. These include:

• Higher overall cost for your auto insurance
• Some companies tack on additional fees for these policies because they create extra work
• May reduce your choices in insurance companies or policies because not all insurance carriers offer this option

If your insurance carrier does not offer monthly payments and you can afford to do so, you can pay a three month policy and then budget the rest in a special account to make the next three month payment.

Ways to Make a Monthly Payment Lower

Even though paying by the month is not the most cost effective way to buy auto insurance in general, there are ways to make it more affordable. Here are some suggestions to consider:

• Reduce the amount of coverage to the lowest that you can bear. For instance, if your car is more than five years old, consider going to the state minimum instead of full coverage insurance to save more than a few hundred dollars on a policy.
• Increase the amount of the deductible that you are willing to carry on your auto policy which will also lower your insurance rates.
• Look for insurance carriers that have low rates, typically the insurance companies with the fewest thrills and extras.
• Consider buying and paying for your insurance online instead of through an agent.
• Insure only yourself with an exclusionary policy. This is not a good policy if you allow anyone else to drive your vehicle. However, if you are a single person without any other licensed drivers in your home, it makes sense.

Know the Risks in Your Area

Your monthly insurance rate is determined by more than just the kind of car that you drive, your age and your credit rating. Where you live can also play a major role in your auto insurance costs. These factors can raise your insurance dramatically:

• Areas with increased natural threats like hurricanes, tornadoes, earthquakes or flooding.
• Areas with increased threats from animal damage
• Areas with increased crime rates, usually urban areas. Auto theft rates can dramatically raise insurance rates within that city and may sometimes impact surrounding cities as well.

Another thing that can cause insurance rates to go up in your local area is insurance fraud. The insurance companies lose billions of dollars every year due to insurance fraud and they will work to recoup that money in any way that they can. Florida and Louisiana are the two states with the highest rate of insurance fraud at this moment.

Look for Discounts that Protect You from Some Risks

If you can get discounts to save you money, it is important to do so. There are a number of ways that you can protect your vehicle while saving yourself some money in the process. These include:

• An anti-theft device on your car.
• Safety equipment on your car whether they are standard or added.
• A safe driving record. One of the best ways to keep your costs low is with a clear record.
• A reliable, low to insure car. If you are in the market for a new vehicle, always check the insurance costs when making your choices