What Is the Automatic Payment Discount?

How you choose to pay for your car insurance is up to you. Insurers may give you a discount if you pay automatically. Here's how it works.
Woman setting up automatic payment for insurance

How you pay for your car insurance is up to you. You can choose to make manual payments or enroll in automatic billing. In the end, it’s up to you so long as you pay on time. But what if one of these methods lowered your rates? As it turns out, one does. Some insurers offer a discount when you set up automatic payments.

Insurance companies prefer it when you pay automatically. The reason is simple. Customers that set up auto pay are less likely to switch to another provider. Also, when you manually pay your bill, there’s a chance you might forget and miss a payment. Setting up autopay helps you avoid any lapses in coverage. Those who pay their insurance in full generally can’t qualify for this discount. But they can get a paid-in-full discount.

This article will take a more in-depth look at the automatic payment discount. It’ll tell you about how it works. You’ll also learn about which payment types are generally acceptable to qualify. Finally, we’ll list some major carriers that offer this benefit to their customers.

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How the Automatic Payment Discount Works

The automatic payment discount is one of the easiest to qualify for. All you have to do is set up autopay with your provider to pay your car insurance bill each month. And that’s all it takes to qualify if your carrier offers this perk.

Insurers also offer savings for those that opt to pay their policy in full. But you can’t stack autopay and paying full because they’re mutually exclusive. Keep this in mind when you’re deciding to set up your payment plan.

If you want to do so, you should ask your agent about setting up autopay when you’re buying your policy. Otherwise, you should be able to change it later to qualify. Many insurers offer some sort of reward for doing so. Also, note that this isn’t available in California.

Which Payment Types Insurers Accept

While many insurers offer some sort of autopay discount, they don’t always accept every form of payment. The most common accepted forms are:

  • Credit cards. Most insurers will accept credit cards. Only use your credit card if you’re comfortable paying it back later. Otherwise, you’ll rack up debt with unforgiving interest rates.
  • Debit cards. These are another common way to pay bills. Debit cards take money straight out of your bank account as soon as it’s processed.
  • Electronic funds transfer (EFT). An EFT is a transfer of funds from your bank account to someone else’s. In this case, you’d be sending money straight to your insurer. Like with a debit card, the money comes straight from your bank account.

Before you set your car insurance policy up for autopay, you should check with your insurer to see what types of payment they accept. Many will accept all three, but it’d be a smart idea to talk to your agent and ask about how you can pay.

Companies with an Automatic Payment Discount

Many insurance providers offer automatic payment discounts. This includes several top insurers that you’re likely familiar with. Here’s a list of major companies that offer an autopay benefit:

These aren’t the only insurers who provide an automatic payment discount, but they are the ones who publicly list it on their website. None of the insurers above tell customers up front how much money they can expect to save. However, getting a car insurance quote can help you find out. The exact amount of savings will depend on your insurer and the state that you live in.

Frequently Asked Questions

Q: How much can you save when you use auto pay?

A:  The amount of money that you can save will depend on a couple of things. First, it depends on your insurer. They’ll get to decide how much you end up saving. It’ll also depend on your state’s rules. California law prohibits it. Be sure to ask your agent about how much you can expect to save when you set autopay up for your policy.

Q: Do insurance companies accept electronic fund transfers as a form of payment?

A: You should be able to use an EFT to pay for your car insurance. Though, that’ll depend on your insurer’s rules regarding payment methods. To be sure, check with your insurer’s rules. Most providers should accept this as a form of payment.  If you can’t use an EFT, credit and debit cards are almost always acceptable forms of payment.

Q: Are automatic payments a good idea?

A: Setting up automatic payments may seem like a good idea, especially when it saves you money. But you should also consider that this means that your money will be gone as soon as you reach a certain day on the calendar. Only set up autopay if you think you can make these payments each month without worry.

Besides the discount, auto payments can also help you avoid forgetting to pay each month. This can help improve your credit score. It can also improve your insurance rates over time. Many insurers will reward you for being a loyal customer that pays on time. These positives might make it worth it to set up autopay.

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