Car Insurance No Deposit Required
Car insurance with no deposit required is a relatively new addition to the auto insurance world. Usually, a carrier will require an up-front payment that equals to the monthly instalment totals, thereby guaranteeing the policy payment. However, as a direct result of the economic difficulties, insurance companies were allowed to waive this up-front requirement so that drivers would not attempt to drive without insurance because of that initial expense.
Insurance policy deposits are, in essence, advanced payment protection for policy benefits. The moment a policy goes into effect, the insurance company is liable for a significant amount of money. Should an accident occur in the early days of a policy, there is no guarantee that the insurance company will recoup its financial investment if a policy holders opts to cancel that policy and go with another carrier. Whilst it’s still possible, the separate deposit the new carrier may require may deter that quick switch.
Car insurance with no deposit required mirrors other coverage options exactly, but it precludes that large up-front payment. Instead, monthly instalments are higher to, in part, compensate for that lack of sum. The policy is still in forced for a contracted time, and cancellation is still possible, but many people prefer the no-lump-sum arrangement and opt for the higher monthly premiums as compensation for this financial convenience.
An interest charge added to the instalments is one method insurance companies compensate for the lack of the deposit funds. This interest is computed as a percentage of the total deposit amount that remains unpaid each month, pro-rated over the term of the policy. Many carriers charge an instalment fee, and that, too, may be added to the basic premium.
Pay As You Go
This special policy arrangement, nicknamed as Pay-go auto insurance, isn’t based on time periods as standard insurance is. Instead of a predetermined payment paid on a monthly basis, pay-as-you go is the insurance that allows literally paying as you go from one place to another, not for the time you aren’t driving.
This mileage-based vehicle insurance is computed on distance travelled. The insurance company provides a GPS unit that automatically tracks the vehicle’s movement and routes. When the car isn’t moving, there is no accrual of fees, regardless of how short or long the engine is off.
Since the payments aren’t based on a known fee, pay-go insurance is another type of car insurance with no deposit required. This policy is ideal for those who drive very little or who have a limited budget and keep mileage to a minimum. You might have to coordinate with the insurance provider if you take the car on longer trips, suspending the pay-as-you-go policy in lieu of other coverage temporarily.
Purchasing an auto insurance policy that requires no initial deposit is much easier than it used to be. The types of no-deposit insurance plans have expanded, and technology like the GPS systems enable accuracy from afar, whilst allowing drivers to keep both one-off and recurring charges to a minimum. To further the potential for saving money, not all no-deposit auto insurance is alike. Compare quotes on this special insurance to maximise your savings by finding a plan that fits your needs for the lowest payment scheme possible.