One of the easiest ways to cut the cost of auto insurance is to properly set up a budget in order to pay the premium in full and not miss a payment.  It’s not as difficult as it might seem but it does take a little advanced planning to make it work. The trade-off is peace of mind and saving money on your auto insurance rates.

First, even a short lapse in coverage can result in an increase in premium and loss of potential discounts you might have been eligible to receive. Since you are required by law to keep insurance, it isn’t something you can go without so plan accordingly.

Likewise, paying your insurance premium all at one time can also save on convenience fees and other charges. Depending upon your carrier, making monthly or quarterly payments can increase your total insurance charges by 10% or more.

Proper budgeting will help you get a grasp on both issues. First, calculate what your premiums are for an entire year. For example, let’s assume you pay $1,200 annually. Send in full payment and then set aside $100 per month toward your insurance.  Most insurance companies send out a bill every six months. When the bill comes due you will have $600 waiting to pay the premium in full resulting in reduced convenience charges, full discounts and no threat of a lapse in coverage.