If you are on a tight budget and looking for ways to save money, car insurance without a deposit is something you should consider. Most auto insurers require a deposit, which can be as much as 20% of the premium, or less, depending on a person’s risk profile.
The good news is there are car insurance companies that offer no deposit plans, but the bad news is not everyone will qualify. Let’s take a deeper look into auto insurance with no deposit and then you can see if it makes sense for you.
What is An Auto Insurance Deposit?
An auto insurance deposit refers to an upfront payment required by an insurer from new customers when they buy a policy. Deposits typically range from $100 to $500, that are due before the policy becomes active.
Auto insurance deposits also financially “bond” policyholders to disincentivize high-risk driving and claims activity. After all, if you’ve made a large deposit on your policy, you don’t want it to be canceled.
The specific deposit amount requested by an insurer is based on factors like the applicant’s age, driving history, credit score, type of vehicle insured, and more. Policy options like lower liability limits and higher deductibles can sometimes lead to a lower or even waived deposit.
Why Do Auto Insurance Companies Require Deposits?
New customers represent a bunch of unknown variables to insurers in terms of future driving habits, claim tendencies, and even premium payment reliability. Requiring an upfront deposit ensures some guaranteed revenue, even if the customer fails to pay future premiums.
Insurers ask for deposits primarily to reduce their risk exposure with new customers. Accepting a new customer always brings uncertainty about future claim volume and driving habits. Requiring an upfront payment ensures the customer has “skin in the game” and may file fewer or less costly claims.
Deposits also help offset administrative, underwriting, and acquisition costs if the customer doesn’t follow through and pay future premiums. Standard deposits range from $100 to $500 when starting a 6-month policy term.
What Companies Offer Car Insurance Without a Deposit?
Several companies offer auto insurance with nothing down. Most are large national companies but there are regional insurers that also sell no-deposit policies. These include:
- Progressive
- USAA Insurance
- Root Insurance
- State Farm
- Geico
- Liberty Mutual
- Allstate
- Nationwide
- American Family Insurance
States That Allow No Deposit Auto Insurance
Each state sets its own auto insurance laws. Not every state allows car insurance without a deposit but some of the largest states do. These include:
- California
- New York
- Florida
- Oklahoma
- Arizona
- Washington
Five Tips for Getting Very Cheap Car Insurance No Deposit
- Check with Smaller National and Regional Companies
While big household names like Geico and State Farm may always require a deposit, smaller insurers sometimes process new car insurance policies with no money down. Companies like The General, National General, and Direct Auto may approve applications regardless of credit or history if the applicant qualifies for state minimum liability limits. Premium finance companies also offer payment plans with no upfront costs.
- Enroll in Usage-Based “Pay-Per-Mile” Insurance
Insurers like Root, Mile Auto, and Metromile charge based on actual mileage driven. They use a small wireless device or mobile app to track driving distances and charge accordingly, with very low base rates and per-mile charges. This innovative model doesn’t require large deposits since there is little risk of non-payment or high loss claim ratios.
- Use a Premium Financing Plan
Third-party premium financing companies like Premium Financing Specialists allow drivers to split insurance costs across several months with automatic payments from a checking account. This avoids large one-time payments altogether. Shoppers provide proof of a valid policy and bank account, fill out minimal paperwork, and payments are withdrawn over time.
- Increase Liability Limits and Deductibles
Ask your agent about tweaking liability coverage and deductibles to find the optimal balance of premium versus out-of-pocket costs. Raising liability limits and deductibles even slightly can lead to noticeable premium discounts, making policies more affordable without a deposit.
- Maintain Good Credit and Check for Discounts
Insurers heavily weigh credit when evaluating new applicants. Maintaining a solid score saves money and shows financial responsibility. Also be sure to inquire about available discounts like safe driver, low mileage, defensive driving course completion, affinity group membership, good student, and more. Every applicable discount will drop the premium and get closer to no deposit.
Recommended Car Insurance Coverage
Drivers shopping on a budget still need adequate protection. Just because you have an insurance policy with no deposit doesn’t mean skipping key coverages. Here are the recommended minimums for car insurance with no deposit plans:
- Bodily Injury Liability: $100,000 per person/$300,000 per accident
- Property Damage Liability: $100,000
- Uninsured/Underinsured Motorist Bodily Injury: $100,000 per person/$300,000 per accident
- Comprehensive & Collision: Equal to the Actual Cash Value of the vehicle
- Medical Payments (MedPay): $5,000
- Personal Injury Protection (PIP): Varies by state
The above limits ensure other parties, vehicles, and property are protected if an at-fault accident occurs. 100/300 BI limits are common requirements across states. Comprehensive and collision provide coverage for damage to your own vehicle. MedPay or PIP helps cover injuries to vehicle occupants.
State Laws on Minimum Auto Insurance Requirements
Liability insurance minimums vary significantly by state. The most common amounts fall between:
- Bodily Injury: $15,000 to $25,000 per person/$30,000 to $50,000 per accident
- Property Damage: $10,000 to $25,000
The lowest requirements nationally are in Florida with 10/20/10 minimums while Alaska mandates 50/100/25 limits. Note per accident limits are higher, providing additional coverage when multiple parties are injured. Other states like New Hampshire and Virginia don’t impose legal minimums but drivers may still carry insurance.
The Final Word On Car Insurance Without a Deposit
Getting very car insurance with no deposit is possible for select drivers in certain states. It’s important to remember that not every driver will qualify for auto insurance with no deposit.
Many of the large national insurers like Progressive Insurance do sell no-deposit policies to drivers that meet certain standards. To get a no-deposit car insurance quote, apply online in about five minutes. Compare rates on multiple no-deposit quotes and save hundreds.