Insurance providers generally offer two ways for you to pay your home insurance premiums: monthly or annually. When you pay annually, all of your monthly premiums are bundled into one annual payment. At first this may seem that paying annually isn’t worth it, but this isn’t true for every homeowner.
Benefits of Paying Home Insurance Annually
In general, insurance providers will offer a discount for homeowners who decide to pay annually aside from monthly. This is an obvious benefit as opposed to paying monthly, as you can still qualify for other discounts such as bundling home and auto, loyalty discounts and more.
It also reduces your monthly bills and the likelihood of missing out on a payment. Instead of keeping up with a payment each month, you only have to worry about one single bill a year.
However, paying annually also has its drawbacks. As expected, paying annually means paying a much larger sum of money upfront rather than spread out through smaller payments. Not everyone has the ability to pay substantial expenses out of pocket, which is why many insurers pay monthly.
Benefits of Paying Home Insurance Monthly
Monthly payments are generally more common, primarily because they are easiest to pay. Breaking down a $1,000+ home insurance policy into monthly payments can make it much more manageable for most families.
One of the possible downsides of paying monthly is the possibility of missing a payment. Missing a home insurance payment can lead to higher premiums and even a cancelled policy if not rectified within a certain amount of time. You can combat this danger by setting up automatic payments that draft from your account on the same day each month.
Whether you pay monthly or yearly, setting up an automatic draft can cut out unnecessary expenses such as filing fees and administrative costs.
Which One is Better?
There is no definitive answer to which of these payment options is best, as it varies depending on the policyholder and their home. You may prefer monthly payments while your neighbor could choose a single annual bill.
Be sure to compare quotes among multiple insurers and explore your options. Speak with an insurance agent about what option is best for you and other ways you can save money on home insurance, such as qualifying for discounts like bundling home and auto, loyalty discounts and more.