Monthly Car Insurance Costs

Looking for pay monthly car insurance? The best policy to buy may be a short-term one, or a full year's cover with a low cancellation charge. You could use a good cheap insurance site such as no deposit site or cheap insurance price comparison site Moneysupermarket for this. The most advantageous one for you will depend on your circumstances.

Buying a short term policy

These are designed for people who only wish to drive a car for a very brief period; they last for a maximum of 28 days and can usually be renewed at the end of these periods. Whilst insuring your vehicle in this way, very economical they do however tend to work out more expensive if you require cover for more than about a month.

Buying a yearly policy, with a cancellation option

Most insurers will allow you to cancel a policy and receive back a proportion of the premium. However, they all have rules and penalty charges. We have seen penalties of around 25, but as high as 100 or more with the smaller and cheaper insurers.

Which is the best policy for you to buy?

You need to do your mathematics. Firstly, get a quote for a single month policy; there are numerous companies advertising these on the Internet. Secondly, go to a good price comparison site, which allows you to make monthly repayments and get quotes from there as well. Find out how much the cheapest insurers will charge you for cancellation; and if the total cost (in other words, the first months premium plus the cancellation charge) comes to less than the cheapest quotation for a shortterm policy, this may be your best option.

Advantages of one month policies

If you have a car accident whilst you are covered under one of these policies you will probably not lose your existing no claims bonus with your current insurer. It is also simpler to insure yourself for driving a vehicle that you do not actually own at the time, provided that you have the owner's permission.


You may find you have to pay a hefty excess in the event of a claim.

Advantages of a yearly policy

You may well be covered for other vehicles that you do not own, as well as your own car.

Disadvantages of a yearly policy

It is likely that if you have an accident which you make a claim for, you will be expected to pay the full year's premium. This could make your one month's cover extremely expensive.

If you pay the full premium in advance it may well be much cheaper than having a monthly paid policy since the insurer may well claim finance costs as well as a cancellation charge. This means that you may well have to, initially, pay out quite a large sum of money in advance. Whilst you should get most of this back eventually, you may feel that the extra hassle simply isn't worth it.