Case study: How much do you save on auto insurance when paying your policy in full?

During this time of year, there is an increase of auto insurance customers who pay their policy in full. This is primarily because people get their tax returns around this time of year. But the question is, how much do you really save on an auto insurance policy by paying in full? This is what I decided to do for this month's case study.


How the study was conducted

• Down payment plus monthly installment premiums were totaled and compared to what the paid in full premium would be.
• I picked 40 unsold quotes at random and compared the premiums when paying the monthly payments versus paying in full.
• I took 10 quotes from four of my major carriers and compared the percentage of decrease to find an overall average percent of savings by paying in full.
• No distinctions were made between the types of auto insurance policies or the states where the quotes came from. Everything was included.
• No distinctions were made regarding a driver's credit score, driving record, or CLUE (prior insurance claims). Again, everything was included.
• Quotes came from 6 different states: Ohio, Michigan, Pennsyslvania, Indiana, Virginia and West Virginia.
• For each of the four carriers I used, I calculated that company's savings vs. other companies. This included both the average savings and the ranges from the lowest and highest savings.
• I finally calculated the total aggregate percentages and ranges.

Results:

• The overall total average savings by paying in full was 17.6.%.
• The average savings of each of the four companies by paying in full were 16.4%, 24.3%, 12.8% and 16.9%.
• The total range of savings of all 40 policies in the study were as low as 9.5% and as high as 28.3%.
• The difference from one state to the next didn't seem to make any difference.
• The difference from one company to the next was a small, but significant difference.
• There was very little difference between those who paid 6 months in full vs. those who paid 12 months in full seemed to make very little difference. The 12 month full premium was almost always double what the 6 month premium was, minus only about a dollar or two at most.

Summary:
 If there is any way that you can afford to come up with the full six months payment, the least amount that you're going to save is around 10%, while the most you can save can be close to 30%. In my opinion, that's a no-brainer! And this time of year is the perfect time for many of you to do so because of tax refund season.


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