#free auto insurance
First Month Free Car Insurance?
If you are wondering about first month free car insurance, there are a few things you should know. First, there is such a thing, but it might not be exactly what you think.
First month free or any month free car insurance is an option car insurance companies offer as a sale. Your policy will be just like any other. You get the same coverage as someone paying for a full 6 or 12 months of a policy, but you do not have to pay until the second month of coverage. Companies offer this discount to brand new customers, as well as customers choosing to renew their policy. Some even go as far as offering the first two months free to customers re-enrolling for a second year.
Do You Save?
Does this mean customers pay less for their insurance policy? Maybe. Some auto insurance companies offer a true discount. They will take a regular policy, chop off the first month’s payment, and overall a customer pays less for his policy. In other cases, insurance companies fudge the numbers. If the total cost of a policy is $600 and payments are broken into $100 per month, they will offer the first month free, but charge $120 per month thereafter. Overall, you are still paying $600, but you are not making a payment the first month.
For some customers, this version of first month free car insurance is still helpful financially. If you are signing up for car insurance during a month in which your budget is tight, it can help to put off your first payment until month two. However, you need to understand you are not saving anything overall. There might be cheaper options that offer more savings, even if you must make a payment the first month. Determine if your priority is to save on a car insurance policy or if your priority is to postpone your payments. This makes it easier to determine which option is best for you.
Renewing Your Policy
If your car insurance provider is offering a month or two free for renewing your policy, there is a better chance you will actually save money. If a payment is postponed, but a policy costs the same overall, current customers can easily see they are paying the same rate. And since their rate might actually INCREASE if the company makes an offer such as this, there would be no reason for a customer to accept the offer. Here’s an example:
You have been purchasing insurance from a company for a year and paying $100 per month for a total of $1200 for your policy for a year. The company offers you first month free car insurance if you renew your policy, but it does not include a reduction in your overall rate. The month your policy renews, you will pay nothing. The following month and the remaining 10 months you pay $109 instead of $100. You are likely going to notice the monthly rate increase and realize you are not getting a discount.
The only time this offer is advantageous is if your renewal month happened to fall during a tight month financially. You could spread that month’s payment over the course of a year instead of paying it upfront.