Find Cheap Auto Insurance Quotes in Your Area
The phrase "no-deposit car insurance" doesn't have a set definition, and it's not commonly used by car insurance companies. But the most common understanding is that it refers to insurance policies that don't require a deposit when you sign up for coverage. The amount of money you'll have to pay to begin car insurance coverage will vary by company policy, your location and your driving history. A car insurance deposit could be as high as one-third of your total annual bill. Or, it could be even lower than what you'd pay in a typical month. The only way to find the smallest deposit — and the cheapest price for car insurance overall — is to get quotes from multiple insurers.
What is no-deposit car insurance?
No-deposit car insurance isn't a specific product offered by insurance companies. When you go to buy car insurance, you will have the option to split the total cost of your insurance evenly, or close to evenly, across monthly payments over the course of your policy. For many drivers, the first payment will be more expensive than subsequent payments, and this is called the deposit or down payment.
The additional cost of this larger first payment effectively works as a deposit, encouraging you to maintain coverage with the company through the length of your policy. In general, people with safe driving histories and high credit scores are most likely to qualify for no-deposit or low-deposit car insurance.
No-deposit car insurance is not free insurance
Since no-deposit car insurance is not a term regularly used by reputable car insurance companies, the term is sometimes used by disreputable companies in unclear or misleading ways. One possible implication is that you can begin car insurance coverage before paying any money to your insurer. This simply does not happen: Car insurance companies will not provide coverage before you've paid for it. Once your car insurance is active, that means you can make a claim on your policy. If you had coverage and made a claim without paying any money, your insurance company may have to make payments before knowing they would receive any compensation from you.
A deposit is not required to get a quote
Another possible meaning of no-deposit car insurance might be that you can get a car insurance quote without paying a deposit. No major car insurance companies will require a deposit or charge you for a quote. As such, if an insurance company states or implies it's typical to charge for an insurance quote, this is a red flag about that company's trustworthiness. This is different from a construction company, for example, where charging a deposit or fee for a quote may be an acceptable, if not universal, practice.
Who can get no-deposit car insurance?
There's no set amount or percentage you will have to pay for your car insurance deposit. In general, a driver who is seen as low-risk will have a lower insurance deposit and overall rates. How much you'll have to spend to begin coverage depends on several factors that are similar to the way car insurance companies set insurance prices.
Depending on the insurer's policies, your insurance deposit may be only a few dollars extra, or a significant fraction of your total premium — up to 30%. But in some cases, you may even be able to pay less for your first month of coverage than subsequent months, if you have a strong driving history.
How signing up for no-deposit car insurance works
If you want to pay your car insurance in monthly installments, the process is just like the normal process of applying for an insurance quote. Once you've provided information about your vehicle and driving history and received a quote, you'll generally be presented with some or all of the following information:
- Deposit/first payment cost
- Monthly recurring payment cost
- Cost to pay in full
Here's how the first payment, subsequent payments, and total premium for a car insurance policy are displayed on Geico's quote page:
In this case, the monthly rate was $179, with a first payment of $448.29. The effective deposit for this insurance policy is on the higher side — $269.29. Some companies will give a discount to people who pay their entire premium at once, although Travelers does not.
Once you've received your quote, you can generally purchase your car insurance instantly, regardless of how large or small the required deposit is.
How to find the cheapest no-deposit car insurance
Unfortunately, there's no guaranteed way to find very cheap car insurance with no deposit. A given car insurance company may require a smaller or larger deposit depending on your driving history and location. However, we collected a few sample quotes from three top insurance companies — Geico, Progressive and State Farm — and found that for a driver with a good driving history, each had very low required deposits. In fact, Progressive charged a smaller amount for the first month than subsequent months.
Deposit/first month premium
Total 6-month premium
First month costs __ percent of a typical month
Both Geico and Progressive provided a moderate discount to our sample driver for paying their entire six-month premium in advance, although State Farm charged the same amount whether our driver paid the premium in installments or a lump sum.
The best way for drivers to find cheap car insurance with no deposit is to get quotes from multiple insurers. Even if one insurance company requires a larger deposit, you may find that another company does not.