Should I pay car insurance monthly or annually?

Inflation that shows no signs of slowing down and economic uncertainty are pushing more and more people to look for as many ways as possible to save. Among the costs that certainly affect the family budget the most is that of car insurance . However, this is a mandatory expense that cannot be cancelled, otherwise you can no longer use the car. One of the questions that therefore arises spontaneously is whether it is better to pay it monthly or annually. Here are more details on the matter.

Why choose annual car insurance?

The best average price on the market for car insurance , according to the latest data from the Segugio.it Observatory , is around 460 euros despite the increases. The regions where the highest increases were recorded are first and foremost Calabria with a +19.3%, followed by Sicily with a +11.3% and Basilicata with a +10.3%. As for premiums, they have grown significantly in Crotone by +37.3%, in Enna by +24.7% and in Benevento by 20.4%.

Precisely because the costs in some places continue to rise, the question arises whether it is better to pay the car insurance monthly and therefore in installments or in a lump sum . Usually for the latter option you save as many companies apply discounts by reducing the premium.

Verti, for example, always offers a 10% discount on the final rate to those who make a quote and purchase online, while with RealMutua, following the quote, a reduction of up to 40% is offered.

The most widespreadcar insurance policy, in any case, is certainly the annual one because it has concrete advantages compared to the monthly one, both economic and in terms of administrative management.

The biggest advantage, as explained, is that it often costs less than the other because you avoid paying the surcharges that are usually applied for deferred payments. Adriatic Assicurazioni , for example, reports that it is possible to ask for the premium to be split into six-monthly installments but with a 10% surcharge.

The average car insurance premium in Italy, according to the latest findings from Segugio.it, as mentioned, is between 460 and 466 euros but there are regional differences so paying everything together avoids incurring higher costs due to the addition of deferred costs.

The advantages of the annual formula are also that:

• you do not have to pay any expenses each month for twelve months;
• don't forget to pay;
• there is no need to update the policy.

Here's an example:

the average annual car insurance premium is 460 euros. If you choose the six-monthly formula you could pay 10% more for which the final cost would reach 506 euros. In the case of monthly payment, however, the cost could also increase by 20% for a total of 552 euros.

Choosing an annual policy therefore means:

• have a net saving because there are no deferral costs;
• no surprises because the prize is unique;
• have the ability to manage more conveniently because you only have one deadline;
• have the opportunity to get bonuses.

The main disadvantage is the need to have a reasonable amount of money aside because the payment is in a single solution, which could cause problems for those on a limited budget .

Here's an example:

The annual car insurance premium is 500 euros. This amount must be paid immediately in full when signing or renewing the policy.

Pay in one installment also:

• offers less flexibility for managing your household budget;
• It does not always offer the advantages of true fractionation, i.e. without interest or with preferential rates.

Monthly car insurance payment

From one of the latest Findomestic Observatories on purchasing intentions, it emerges that 4 out of 10 Italians have declared to be in a difficult economic situation. Many, then, are unable to put aside even a euro, mainly due to inflation . For this reason, families seek the most disparate solutions to save without giving up essential services such as car insurance, which is mandatory by law.

In order to reduce expenses and make the monthly family budget less problematic, people are increasingly resorting to deferred payment of insurance premiums.

The advantages are definitely:

• the possibility of diluting the installment;
• accessibility, as those who do not have the immediate liquidity to pay everything at once can do so a little at a time, avoiding being left without coverage;
• zero rate in some cases;
• financial flexibility as you can better manage other expenses such as car tax, maintenance and fuel without having to shell out large sums all at once;
• the possibility of not having to sign additional contracts with external finance companies if the installment plan is managed directly by the insurance company.

The disadvantages are instead:

• the surcharges that some companies may apply;
• the possibility of forgetting to pay an installment which could result in coverage being suspended;
• that not all policies can be paid in installments, it depends on the company and the customer profile.

Here's an example:

Let's assume that your car insurance premium is 600 euros in a lump sum. If you choose to pay in installments, a 10% annual increase will be applied for the division of the premium for a total to be paid of 660 euros. The total cost of the policy will therefore be 55 euros per month and the difference to be paid will be 60 euros spread over twelve months.

This formula is ideal for families on a limited budget or for those with variable incomes who want to spread expenses throughout the year.

As explained, it can also be a valid help in times of economic uncertainty such as the current one in which inflation continues to weigh on the purchasing power of families.

In any case, before making any choice, it is important to request a detailed quote and compare the different offers on the market. The more information you have, the greater your chances of choosing the policy that best suits your situation.

Difference between monthly car insurance and monthly car insurance payment

Monthly car insurance payment should not be confused with monthly auto insurance as they are different formulas.

The first is in fact the classic annual car insurance divided into twelve months.

The second, instead, is a solution designed especially for those who do not use the car every day and therefore want to save on the cost of the policy. In fact, there are insurance companies that give the possibility of insuring the vehicle by paying based on the kilometers traveled month by month.

This is therefore a useful formula especially for those who keep their car stationary for long periods and use it only on special occasions. Thanks to it, in fact, the motorist avoids paying an annual premium for a car that remains unused for most of the year.

This insurance model is also very advantageous for remote workers, those who own seasonal vehicles or simply for students away from home.

The main advantages, in addition to flexibility and savings, are:

• that nothing is paid when the car is stationary;
• the possibility of customizing the policy by adding guarantees such as fire or damage from natural events;
• the renewal method which in some cases can also be manual.

For those who drive a few kilometers a year, therefore, monthly insurance can save you money. If you drive often, however, this solution could be less convenient than the traditional one.