Pay the insurance on monthly or yearly?

chris0147

Hi guys,

I have my car insurance which it runs out on Friday midnight. I need your advice because there are two options that I can pay on my insurance, monthly or yearly.

My neighbour said that she pay for her car insurance on monthly as it is better than losing the whole money if it get write off and would not get the money back. She said that it would be better for me to pay monthly. Do you all agree?

If so, my doubt is that if I pay monthly and if I fail to pay up, would the insurance cancel my policy and that I would have to pay them whole sums that I own them?

Do you think it would be better that if I should pay yearly or monthly?

What happens if I pay monthly and if I get a crash as if the car get write off, do I have to pay the insurance all of the sums that I owns them?

Geodark

chris0147 wrote: »

Hi guys,

I have my car insurance which it runs out on Friday midnight. I need your advice because there are two options that I can pay on my insurance, monthly or yearly.

My neighbour said that she pay for her car insurance on monthly as it is better than losing the whole money if it get write off and would not get the money back. She said that it would be better for me to pay monthly. Do you all agree?

If so, my doubt is that if I pay monthly and if I fail to pay up, would the insurance cancel my policy and that I would have to pay them whole sums that I own them?

Do you think it would be better that if I should pay yearly or monthly?

What happens if I pay monthly and if I get a crash that if the car get write off, do I have to pay the insurance all of the sums that I owns them?

From a budget perspective I prefer to pay monthly, but yes if you fail to pay you risk having your insurance cancelled. If your car is written off then the full insurance for the year has to be paid, your payout from the insurance company is normally adjusted to account for this. Why would you have a doubt about paying or keeping up your payments?

dacouch

chris0147 wrote: »

Hi guys,

I have my car insurance which it runs out on Friday midnight. I need your advice because there are two options that I can pay on my insurance, monthly or yearly.

My neighbour said that she pay for her car insurance on monthly as it is better than losing the whole money if it get write off and would not get the money back. She said that it would be better for me to pay monthly. Do you all agree?

If so, my doubt is that if I pay monthly and if I fail to pay up, would the insurance cancel my policy and that I would have to pay them whole sums that I own them?

Do you think it would be better that if I should pay yearly or monthly?

What happens if I pay monthly and if I get a crash that if the car get write off, do I have to pay the insurance all of the sums that I owns them?

Your friend has a shock if she ever writes her car off as with very very few exceptions an Insurer will either deduct the remaining instalments from the claims settlement or allow you to continue paying monthly. They will not allow you to just stop paying the instalments.

If you are late with an instalment you will get a warning to pay the missed instalment asap or the policy will be cancelled or they will demand the full balance immediately.

daveyjp

Your neighbour is making a very common and potentially expensive mistake. She thinks she is getting monthly insurance, she isn't

What she is doing is borrowing the money for an annual premium and paying it back over 12 months, that's why you enter a credit agreement with the insurance company.

If part way through the year her car is written off she will have to pay the policy up.

I always pay annually. I then know its done for the year.

Mobeer

Premium Credit provide a guide to paying monthly for insurance:
http://www.premium-credit.co.uk/files/documents/Jan_2012_Consumer_Guide.pdf

Aretnap

If you can afford to pay it all upfront there's no real advantage to paying monthly, and potentially several disadvantages - it's (often) more expensive, and you run the risk having your insurance cancelled if your direct debit ever bounces for any reason and you don't deal with it pronto - which would be very bad news when it came to getting insurance in future. And even if it's the same price, it's not as if you'd be missing out on much interest on your premium in the current climate.

As above, you can't just stop the direct debit if you want to cancel half way through the year - it's an annual contract and you're actually taking out a loan to pay the premium. If your car is written off or if you cancel the policy you still owe the balance of the loan - and any refund will likely be less than the balance once the cancellation fee is deducted.

Building_Surveyor

If you can't afford to pay up front, pay it in full on a 0% credit card to avoid interest charges for paying monthly, then pay that off.

If you can afford to pay in full then do that. Claim or no claim you will end up paying the premium for the whole year.

rev_henry

Building_Surveyor wrote: »

If you can't afford to pay up front, pay it in full on a 0% credit card to avoid interest charges for paying monthly, then pay that off.

If you can afford to pay in full then do that. Claim or no claim you will end up paying the premium for the whole year.

The credit card option is also good because if you fail to pay for whatever reason your insurance will not be cancelled!

Ectophile

I always pay yearly, so that I know it's done for a year. I don't want to find out that my insurance is being cancelled because a monthly payment didn't go through for some reason.

Richard53

There is no advantage to paying monthly unless you absolutely cannot afford the year's premium and need the insurance now. As others have said, it costs more to pay monthly, and you are liable for the whole year's premium in any case.

Personally, I pay yearly for peace of mind. Direct debit payments have been known to fail, and the consequences could be serious for you.

forgotmyname

Pay yearly and save the interest charges. One of the things i started to do to save money.

Tax for a year unless selling soon, Save a couple of £ but it all adds up.