Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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Laura Walker graduated college with a BS in Criminal Justice with a minor in Political Science. She married her husband and began working in the family insurance business in 2005. She became a licensed agent and wrote P&C business focusing on personal lines insurance. Laura serviced existing business and wrote new business. She now uses her insurance background to help educate drivers about...

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Reviewed by Laura Walker
Licensed Agent for 10 Years

UPDATED: May 20, 2019

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Down payments on auto insurance vary greatly, depending on a number of factors. Each state has its own insurance laws, and the amount of the down payment can vary by location alone.

Massachusetts, for example, allows insurance companies to request up to 30% of your annual premium as a down payment, according to the Massachusetts Office of Consumer Affairs & Business Regulation. This can apply when obtaining a new policy as well as renewing an existing one.

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Just because state law allows for a 30% down payment does not mean that every insurance company will ask for that amount.

Some may not ask for more than one month’s premium as a down payment while others may not ask for any down payment at all.

Down Payment Examples

To provide an example of a down payment, let’s say your monthly auto insurance premium is $50. That would calculate to an annual premium amount of $50 times 12 months, or a total of $600.

If an insurance company in Massachusetts wanted to take advantage of the full 30% state law allows, your down payment on such a policy would be $180.

The insurance company could ask for any amount between 0% and 30%, depending on each particular company. If a company wanted 20% of your $600-per-year policy, your down payment would be $120.

If they wanted 15%, your down payment would be $90. If the company asked for 10%, you would owe a down payment of $60.

Your down payment can also depend on a few other factors. These include the type of payment schedule you choose, the length of your policy and any fees related to setting up a new policy or renewing an existing one.

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Payment Schedules

Payment schedules can be equally as varied as down payment auto insurance calculations, with a single insurance company often offering more than one type of schedule.

One option may be paying your policy in full at the time it’s issued. A down payment with this type of schedule would most likely be unnecessary since you are paying off the entire amount for the length of the policy.

Insurance companies may offer monthly payments, which would entail 12 installments throughout a one-year policy. Any other number of installments may also be available, with two installments or more throughout the length of the policy.

A company may offer discounts for paying your bill in full, or charge installment fees for paying by installments.

The type of installment plans may not only vary from company to company but can also vary in a single company from state to state.

What looks like a cheaper auto insurance quote might actually reflect the lower monthly payments of a monthly plan versus a bi-annual payment. New policies may have different payment schedule options than policy renewals.

Overall Cost of Policy

The overall cost of your policy can play a role in the amount of down payment required. A more expensive policy will typically merit a higher down payment.

The overall cost of your policy depends on your state of residence, the individual insurance company and a whole host of factors that can help bring your annual premium up or down, according to the Illinois Department of Insurance.

The type and level of auto insurance coverage you choose help determine your premium, as does the amount of your deductible. More coverage, high coverage limits and a low deductible are generally going to cost more than less coverage with lower limits and a high deductible.

Individual characteristics that play a part in determining your insurance rates include your gender, age, marital status, and location. A good driving record is a factor, with a good record often earning you a discount.

Your credit history can also play a part, with a solid credit history of paying bills on time possibly contributing to lower rates.

Your vehicle itself helps determine your rates. Cars that are more frequently stolen or prone to breakdowns may cost you more to insure than those with reliable histories. How frequently you drive, your vehicle’s primary use and your annual mileage come into play.

Discounts may be available to help lower your rates and therefore your down payment.

Good driving often nets a discount, as does taking particular safety or defensive driving classes.

Installing anti-theft devices can lower your risk of theft and vandalism while safety devices can bring down the risk of costly medical bills. Both may make you eligible for a discount.

Additional discounts can come from being a mature driver, being a teen or young adult who is a good student with a “B” average or higher, or for having an away-from-home college student in the household.

Using the same insurance company to insure more than one vehicle or for more than one type of insurance can also work for a discount.

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