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What does it mean when a policy is ‘fully paid up?’

What to Know

  • Fully paid-up car insurance means you decided to pay your total annual premium all at once
  • Car insurance companies prefer when drivers have fully paid-up policies
  • Drivers can earn discounts of up to 12% for paid-in-full policies

Paid-up car insurance means you paid all of your premium ahead of time and are no longer responsible for making car insurance payments until your next renewal period.

When your car insurance policy is fully paid up, it means that your coverage is up-to-date. You won’t owe any more premiums until your next renewal date, but don’t forget to ask your car insurance company about paid-up discounts. The best car insurance companies will offer up to 10% or more for fully paid-up insurance.

If fully paid-up options are important to you, compare car insurance companies to find one that offers the payment options you need. Some companies require drivers to pay for their policies in full. Others will let you split payments monthly or bi-annually. 

Keep reading to learn about the different ways you can pay for car insurance and how to save the most money on your policy. Not sure if your car insurance company offers a fully paid-up discount? We compare rates from multiple companies below to help you get the cheapest paid-up car insurance quotes.

What happens when car insurance is paid in full?

Most car insurance companies allow drivers to pay their insurance bills in a number of ways. Most companies will expect premiums to be paid monthly, bi-annually, or paid in full, whether you pay online or write a check. If you choose paid-in-full, that means you intend to pay all of your auto insurance premiums upfront on your policy’s start date. 

Paid-up car insurance means that, rather than paying monthly, you decided to pay your total annual premium all at once.

Those who buy paid-up car insurance don’t have to remember to pay monthly car insurance and often qualify for a discount for paying their policy in full. Some insurance companies also offer up to 12% or more for paid-up insurance.

Which insurance companies offer paid-up car insurance?

Most of the major car insurance companies accept full payments for insurance policies. Take a look at the table below for annual rates from the top 10 car insurance companies in the country:

Average Annual Car Insurance Rates by Age and Gender

CompaniesAverage Annual Rates for a Single 17-Year-Old FemaleAverage Annual Rates for a Single 17-Year-Old Male
USAA$4,807.54$5,385.61
GEICO$5,653.55$6,278.96
Nationwide$5,756.37$7,175.31
State Farm$5,953.88$7,324.34
American Family$5,996.50$8,130.50
Farmers$8,521.97$9,144.04
Progressive$8,689.95$9,625.49
Allstate$9,282.19$10,642.53
Travelers$9,307.32$12,850.91
Liberty Mutual$11,621.01$13,718.69
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These rates are just averages but will give you an idea of what it will cost upfront for paid-up car insurance.

How much does car insurance cost? That will vary depending on your age and where you live. Your driving record and the kind of car you drive will also impact how much you pay. For example, younger drivers have more expensive rates than older drivers, but a good driving record with no tickets or accidents will always have the cheapest rates. 

Before you buy car insurance, shop around with at least three different companies near you to find the most affordable rates. You will also want to shop with companies that reward drivers for fully paid-up insurance with discounts and other perks.

Which companies offer discounts for fully paid-up car insurance?

Most of the companies you shop with will offer a discount for paying your annual premium upfront, but the amount will vary. Discounts can range between 6%-12% depending on the company, so always compare the discounted rates to find out which is actually the most affordable for your budget.

Below you’ll see which companies offer fully paid-up car insurance discounts:

  • Liberty Mutual – 12%
  • Progressive – 11%
  • Allstate – 10% 
  • Travelers – 9%
  • Farmers – 6%

The good news is that fully paid-up car insurance discounts are popular with insurers. Most — but not all — major insurers offer this discount. However, if you don’t see a discount listed, don’t hesitate to ask. In addition, you may find that smaller companies in your area offer this discount on top of more affordable rates than some of the bigger companies. 

For example, GEICO is one of the most popular insurance companies, but it doesn’t offer a paid-in-full discount. What’s more, GEICO charges drivers an installment fee for monthly payments.

However, GEICO often has cheaper rates than other companies, including Liberty Mutual. But Liberty Mutual offers a paid-in-full discount that still applies for drivers who make two payments as well as just one. So, compare rates before you buy. Slight differences like these can translate into huge differences in your rates.

Do you still pay insurance if your car is paid off?

Yes, you must keep your car insurance payments up-to-date or risk losing your license. Paid-up car insurance does not apply to your car payments. Even after you pay off a vehicle, state law requires that you continue to carry insurance on that vehicle. 

However, once your car is paid off, you can drop full coverage car insurance and just carry your state’s minimum requirement. Minimum liability insurance has the lowest car insurance rates, but coverage is limited.

If you own your car, does your insurance go down?

Not always. You probably won’t notice your car insurance rates decrease after you pay off your vehicle, at least not right away. However, you can lower your rates at your next renewal period by raising your deductibles and dropping coverages you no longer need, like GAP insurance. 

Be aware that you will end up paying more out of pocket if you raise your deductibles. If you want to save the most money on car insurance without sacrificing coverage, shop around at your next renewal period and compare multiple car insurance quotes.

Should I pay my car insurance in full or monthly?

The answer to this question depends on your budget and your preferred payment methods. Some insurers reward drivers for paid-up insurance, but other companies charge fees to process monthly payments. 

Before you buy a policy, always ask your insurer about a preferred payment method and if monthly payments are available. For example, some insurers offer car insurance with no down payment. That kind of policy can provide coverage quickly, but you could end up paying more expensive premiums six months later. However, paying all of your premiums at once also gets you covered quickly and earns you a discount with many insurers.

Don’t be distracted by deals and discounts until you know that fully paid-up car insurance fits your budget. Most car insurance companies will give you a refund if you want to cancel your policy after paying in full, but make sure you cancel at the right time or you could pay a fee. Drivers are allowed to cancel policies during the renewal period, so shop with companies that offer monthly or bi-annual renewals to make the most of your fully paid-up insurance options.