Why Do They Want So Much Money Down?

WV & OH ONLY

"I found a car insurance price I can live with, but they want a lot of money up front to start it. Why is the first payment so big?"

Coming up with that first payment can be the hardest part. I see it every week.

Car insurance companies want money up front because they take on your risk the moment the policy starts, and they've been stung by people who pay once and disappear. How much they ask depends on the company and on how likely it thinks you are to keep paying. Two companies can look at the same driver and ask for very different amounts to get started.

I wish getting started cost less. We want the best rate for you and a first payment you can actually make.

The amount needed to start a policy is one more thing that changes from company to company. We quote with 13 companies, so you can see the price and what it takes to get started, side by side, before you choose.

No sense hiding it, I want you to call. If the first payment is the thing standing between you and being insured, tell me that up front. It changes which companies I look at first.

WV & OH ONLY

Coverage, starting now. Once your policy is in force, a wreck on the way home from my office is the company's problem. It could owe far more on that one wreck than you'll ever pay it.

That's the deal with any insurance. It's just more obvious on day one, when you've paid little and the company is already on the hook.

Because it happens. Some people buy a policy to get a tag renewed or to drive a car off the lot, then never make another payment. The company still had to issue the policy and carry the risk for however long it stayed in force, and it may never collect for that time.

A larger first payment is one way a company protects itself. So is the law, to a degree. In West Virginia, if you don't make your very first payment, the policy can be voided back to the day it was issued, after the company sends you a written notice giving you ten days to pay.

Companies don't all see the same person the same way. Things that can make a company more cautious about getting paid include:

• A recent gap in your insurance
• A past policy that was canceled for not paying
• A short history with insurance at all
• A driving record the company considers risky

West Virginia's insurance commissioner says auto insurers generally see a break in continuous coverage as a negative sign. I'd expect that to show up in more than one place on your quote.

Not by itself. It's a business decision by one company about one customer. It doesn't mean you're being cheated, and it doesn't mean nobody else will take you.

It's also worth looking at the whole picture. A low amount to get started doesn't help much if the total for the policy is a lot higher. And a low total doesn't help if you can't come up with what it takes to start. You need both numbers.

Sometimes, usually by changing something else. Here's what I'd look at with you:

• A different company. This is the big one.
• Your start date. If your current policy runs for two more weeks, we may have time to line it up with payday. Don't let it lapse to do that.
• Your coverage. We can look at your deductibles on an older car. I won't talk you out of coverage you need just to shrink a payment.
• Other policies. Sometimes putting things together with one company changes the math.

Don't go without insurance while you save up. A gap can make your next policy harder to get, and it can bring trouble with the state. If you're short this week, call before the policy ends and not after.

Don't guess at answers on an application to bring the number down, either. If the company finds out what's accurate later, the price can change, and misrepresentation is a reason a policy can be canceled.

Tell me what you can put down today. Let's see who'll work with that.

WV & OH ONLY

Next in the series: Part 32, Is Paying My Car Insurance in Full Worth It?