Monthly payments can make coverage more manageable. But some kind of payment must be given up front.
The concept of auto insurance is basically a contract between two parties in which one party, the insurer offers to cover the risk associated with traffic related accidents and the other party, the vehicle owner or driver pays cost of coverage to the insurer. With competition and innovation, insurers offer some flexibility in payment towards the cost of coverage. These flexibilities were varied though most common was installment payments. Infact, when people started facing problems in making full payments upfront, companies offered the flexibility of making monthly car insurance payments. This is because for buyers arranging the whole amount together was a problem but arranging a part was not so big an issue. However, to compensate against delayed payments, insurers used to charge a nominal interest over the balanced amount. Therefore, installment payment is a win-win situation for both the insurers as well as the coverage seeker. At this point, there was no such things as no down payment auto insurance.
However, getting a policy issued without any down payment is not very common in the industry. This is because, once the insurer issues the coverage, they become bound to cover the risk as per the terms of policy, regardless of whether the insurer receives money or not. Also, there are several instances of default of such payments. In this situation, the insurer finds itself helpless. Therefore, usually companies do not offer ‘no down payment coverage plans’.
Although one can avoid broker fees by dealing with companies directly and only have to pay for their first month up front. Therefore, it can’t be said that there is no such thing as ‘No Down Payment Auto Insurance’ but it varies from company to company. To purchase coverage at the cheapest rate possible, one needs to do a little research and compare companies thoroughly.
