Method of Paying Insurance

[coppertop]

My auto and homeowners insurance is up for renewal soon.  Last year, I went through getting prices and selected a particular insurer.  When the paperwork came through, I was unhappily surprised to find out that the quote depended on my allowing them to pull 1/12 of the amount out of my account every month.  I objected to this arrangement and told the woman/broker that I prefer to pay in full up front.  She told me that the price she quoted depended on my allowing them access to my bank account, otherwise I would pay more.  I was pretty PO'd and canceled the order.  Since I was down to the wire at that point, I ended up staying with my old insurer.  Have any of you experienced this and do you object to anyone having access to your bank account?  I realize that for insurers, this is a ploy to get you to stay with them - they are hoping that you will not really notice that you are up for renewal and they will just keep taking money out of your account forever, all the while jacking up the cost of your insurance bit by bit.  The broker admitted as much to me. 

[rantk81]

I've never had this situation happen, but if I was paranoid enough about it, I'd set up a free checking account on ally.com specifically funded with the exact amount that the insurance company was going to pull out, and let it go.

I've got several accounts (both checking and savings) at ally.com, with no maintenance fees at all, and once you have one account created, you can create more accounts online whenever you want to, all available under your primary login on the website.

[Gin1984]

You know you don't have to wait to do this when your insurance is up for renewal right?  I check rates and move when it is convenient for me.

[Jack]

IIRC, my car insurance would give me a discount for auto-debit, but gives me an even bigger one for paying in full at the start of the 6-month interval.

Normally, I try to set it up so that my bank account receives e-bills from creditors and then "pushes" the automatic payment from the bank's side. There are only a few creditors I allow to "pull" instead: the student loan creditor since they give me a discount on the interest rate, the mortgage servicer because I don't want to risk that payment being wrong and they don't support e-bills, and maybe one or two others because I set up autopayment with them so long ago that I hadn't realized the superiority of "push" over "pull" yet.

[GetItRight]

I would do the separate checking account thing if it was a really good price for the coverage or an insurance company I strongly preferred. This is odd though, in my experience every insurance company I've used has either changes the same or less for one lump payment per term and accepted either cash or a CC for their best rate.

And I'll second the change when it's convenient for you. They will refund you for the unused portion of the term. Yes it's less convenient, but you're down to the wire.

[redbird]

I've never had that happen. My insurance company just sends me a bill once a year and then I will go to their web site and pay with my credit card (earning rewards!). My insurance company does not have access to any of my bank accounts at all.

[coppertop]

The two insurers I've experienced this situation with are Encompass (which I think is owned by a larger, more well-known insurance company), and Allstate, which is the one I had the issue with last year.

[Lis]

Same as some others, my insurance offered a small discount for setting up auto debit (maybe 2%?) and a slightly larger for paying in full (5% I think). Paid in full on a credit card that earned rewards (and yes, in turn my cc was paid in full).

From the perspective of the insurance company, it doesn't make sense for them to prefer you pay monthly instead of in full. Every time they need to collect a payment from you is a chance that they won't receive said money. It's in their favor to collect payment in full, to guarantee they receive what you owe them. It sounds like you either spoke with a rep who had no idea what they were talking about, or that insurance company is run by idiots.

[pbnj]

I also had it happen with Allstate and dumped me for raising my rates with no claims.  Good riddance.