What is no-deposit car insurance?


Quick Answer

No-deposit car insurance allows policy holders to make periodic payments instead of making a lump-sum down payment covering several premium payments as is required by some other car insurance providers, according to Car Insurance Comparison. This arrangement makes payments easier for those who can't afford to put up a lump sum. In order to make the insurance active, the policy holder just must make the payment for the first period.

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What is no-deposit car insurance?
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Full Answer

If payments are required at the beginning of each month, the no-deposit policy holder makes a payment for coverage that month, reports Car Insurance Comparison. Such a system also makes it easier if the policy holder wants to change insurance policies, because he doesn't have to wait for a longer commitment period required by other policies. Providers of no-deposit car insurance usually make the insured person sign an agreement to have monthly premiums deducted directly from a bank account, so the policy holder is sure to have insurance until he cancels the service.

There are some drawbacks to such insurance, explains Car Insurance Comparison. Before making a decision, consumers should be aware that hidden fees may be included with the monthly payment. Because the providers don't require a lump-sum deposit, this usually translates to higher premiums than with other types of policies.

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