The standard US auto policy term is six months.

Insurers offer a discount of ~15% if you pay in full up front.

Insurers also refund any "unused premium," net of an early cancellation fee, which is usually 10% of unused premium.

Let's compare paying for your policy in full up front against paying for it monthly.

Paying in full up front

Total policy premium

$2,000

Paid in full discount

($300)

Premium if paid in full

$1,700

Let's say you choose to pay the premium in full, and cancel the policy after three months:

Paid in full premium

$1,700

Unused premium at cancellation

($850)

Early cancellation fee (10%)

$85

Premium due back to you

($765)

Therefore,

Net premium, Paid in full up front

$935

Paying monthly

Total policy premium

$2,000

Monthly payments

($333)

Therefore,

Net premium, Paid monthly

$999

Conclusion

In this example, paying in full and cancelling after three months is a slightly better deal than paying monthly:

Here's another thing to consider: paying in full for six months means less things that might require your attention during your visit.

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