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A.M. Steinbach is a Brooklyn-based writer, editor, and content marketing strategist who has been writing for Compare.com since 2023. He's an expert in breaking down a diverse range of insurance topics into crisp, readable content.
A.M. has worked with major brands in insurance, tech, finance, and healthcare. He also contributes to The Average Joe, a personal finance newsletter that reaches more than 250,000 daily readers, and other notable publications.
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Nick Versaw leads Compare.com's editorial department, where he and his team specialize in crafting helpful, easy-to-understand content about car insurance and other related topics. With nearly a decade of experience writing and editing insurance and personal finance articles, his work has helped readers discover substantial savings on necessary expenses, including insurance, transportation, health care, and more. As an award-winning writer, Nick has seen his work published in countless renowned publications, such as the Washington Post, Los Angeles Times, and U.S. News & World Report. He graduated with Latin honors from Virginia Commonwealth University, where he earned his Bachelor's Degree in Digital Journalism.
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All legitimate car insurance companies require you to pay a bit up front to activate your new auto insurance policy. Luckily, certain companies offer lower deposits — and almost all car insurance companies give you several ways to save throughout your policy term.
In this guide, we’ll discuss how to lower your initial deposit, highlight some reputable insurers that require lower down payments, and offer strategies for finding cheap auto insurance.
Be wary of companies that advertise zero-deposit insurance — many are scams.
Hugo, State Farm, and Auto-Owners are a few notable insurers with low down payments.
Temporary insurance and non-owner insurance can be good options for low deposits.
Car insurance companies require you to pay a deposit up front in order to activate your insurance — but not all companies are the same when it comes to down payments. For instance, Hugo advertises no-down-payment car insurance on its site. But Hugo is a unique usage-based insurer, and you still need to pay for your first few days of coverage to get started. Most traditional companies won’t let you skip an initial payment.
Many traditional insurers offer specialized billing plans to make paying easier. For example, State Farm encourages policyholders to bundle policies, choose smaller monthly payments, and adjust their payment due date to ease the financial burden.
Companies promoting promises like “first month free” and “$0 down” are usually scams. Reading reviews on reputable sites like Trustpilot or Better Business Bureau (BBB) can give you an idea of whether these companies are legit. You can also look them up through the National Association of Insurance Commissioners (NAIC) consumer insurance search. If the company isn’t listed in the NAIC database, you’re likely dealing with a disreputable company that’s trying to scam you.
You probably can’t get around paying an initial payment for car insurance. Fortunately, you can still lower your up-front costs with the following strategies:
Do your research: Some non-traditional car insurance companies, including usage-based insurers like Hugo, offer lower initial payments. Read reviews to make sure these companies are reputable and backed by financial strength.
Choose monthly payments: Instead of paying your six-month or year-long premium in one lump sum, ask your insurer if you can pay in monthly installments. While this might mean you end up paying more over the course of your policy, your initial payment will be smaller.
Adjust your billing date: Some car insurance companies allow you to choose what day of the month you pay. Ask your insurance agent if you can time your payment date so it aligns with when you receive your paycheck.
Sign up for automated payments: Insurers will occasionally offer a discount to policyholders who sign up for auto pay. You can also turn on billing reminders so that you know when a payment is about to be automatically deducted from your account.
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If you’re shopping for auto insurance coverage, you should be prepared to pay a certain amount up front. These initial payments vary by company — and though no company will completely do away with an initial deposit, a few reputable auto insurance companies will activate your coverage with a relatively low initial cost.
Here are five reputable car insurance companies to consider if you’re looking for a low initial deposit.
Average liability premium: $49 per month
Compare.com Rating: 3.22 out of 5
Hugo’s unique pay-as-you-go payment plan may work for drivers who don’t want to pay much up front. You can buy as few as three days of coverage, then turn coverage off when you don’t need it. With an average liability rate of just $49 per month, you can put down as little as $5 to get covered with Hugo. But you only have coverage when your policy is turned on, so if you cause an accident when your coverage is off, you’ll be stuck paying repair bills and medical costs yourself.
Average liability premium: $40 per month
Compare.com Rating: 4.43 out of 5
A top-12 car insurer by market share, Auto-Owners offers a more robust range of coverages and resources than Hugo. The company also has lower monthly liability rates at just $40. While you’ll have to pay that first month’s premium up front, $40 is a relatively reasonable initial deposit.
Average liability premium: $47 per month
Compare.com Rating: 4.91 out of 5
USAA consistently scores high customer service scores. Serving military members and their families, it also offers competitive rates, with an average liability rate of $47 per month, according to our data. If that first monthly payment sets you back financially, USAA makes it easy to pause or spread out payments.
Average liability premium: $55 per month
Compare.com Rating: 4.90 out of 5
As the country’s top insurer by market share, State Farm is a popular option for drivers looking to save. State Farm drivers pay $55 per month on average for liability insurance and can make payments monthly. You should expect to pay an initial deposit of $55 to get your first month of coverage, and State Farm’s wide array of discounts can bring those premiums down more.
Average liability premium: $56 per month
Compare.com Rating: 4.65 out of 5
Drivers with GEICO — another giant in the industry — pay an average of $56 per month for liability insurance, according to Compare.com data. GEICO’s most spread-out payment plan lets you put down 25% of your premium initially and then pay 18.75% of your premium over the next four months. That means you can expect to pay around $165 to activate your coverage with GEICO.
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Your auto insurance rates vary based on different factors, including your age, gender, driving record, ZIP code, and more. You have control over many of these factors, like the company you choose, how much car insurance you buy, and your deductible. But others — like your age and gender — are obviously out of your control.
Being proactive pays off with car insurance, regardless of what your overall insurance profile looks like. Taking advantage of the tips below can help you find affordable insurance on a tight budget.
Maintaining a clean driving record is one factor in your control as a driver. Drivers without any at-fault accidents, speeding tickets, DUIs, or other traffic violations on their records pay lower rates, on average. Car insurance companies see safe drivers as less likely to file claims in the future and feel comfortable charging them lower premiums as a result.
Minor infractions stay on your record for three to five years, while more serious infractions — like DUIs — can stay on your record for up to 10 years. High-risk drivers can enroll in a driver safety course to show you’re serious about improving a bad driving record, which can earn you a discount.
Shopping widely and comparing quotes is the best way to find affordable car insurance. Insurance comparison sites can help you get multiple car insurance quotes at once and then compare them side by side.
Many experts recommend getting quotes from at least five companies when shopping for a new policy. You might even compare available discounts or different payment plans, which can help you find the insurance company with the lowest up-front costs.
Only certain drivers need full-coverage car insurance. For example, if you have a new car or a particularly expensive car, it’s worth considering collision and comprehensive coverage. And if you finance or lease your vehicle, your lender requires them.
But if you’re driving a cheap used car or a car you might not repair if you total it, you may just need a liability-only policy.
Purchasing liability-only coverage is cheaper — though it means your insurance company won’t cover your car’s repairs if it gets damaged in an accident. Just make sure to meet your state’s minimum coverage requirements, which vary depending on where you live.
Your deductible is the amount you pay if you file a comprehensive or collision claim. For instance, if you get in an accident that will require $2,000 in repairs and your deductible is $500, you’ll need to pay $500 before your insurance company will cover the remaining $1,500.
Choosing a higher deductible comes with lower monthly premiums, but note that you’ll be on the hook for more out-of-pocket expenses if you need to file a claim.
Most car insurance companies offer discounts that help you find cheap car insurance. Some of these discounts are simple and can be earned in minutes, including discounts for turning on paperless billing or paying your yearly premium in full. Bundling your auto insurance with your homeowners or renters insurance can also lower car insurance premiums.
Usage-based insurance means your rates are set based on how you drive and how often. Insurers like Mile Auto require you to send a photo of your odometer to track mileage. Others, like Nationwide’s SmartRide program, use your smartphone’s GPS to monitor your driving.
If you drive fewer than 12,000 miles per year, it’s probably worth considering usage-based insurance. This could mean drivers who work at home and don’t commute or people who live in the city and mostly use their cars for weekend trips. You should also consider usage-based insurance if you don’t typically drive at night — which is considered a “high-risk” time to drive.
Many states allow car insurance companies to look at your credit history when determining your rates. On average, drivers with “poor” credit pay roughly double what drivers with “excellent” credit pay. Car insurance companies see drivers with good credit as more likely to pay bills on time, making them less risky to insure.
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Car insurance isn’t always affordable, and you may find that you’re unable to afford the down payment needed to get coverage. Luckily, you still have options. The following strategies can lead to a lower up-front payment and may be a good idea if you need coverage but can’t afford an initial deposit.
While there used to be no such thing as “temporary” car insurance, newer companies like Hugo and Toggle — which use technology to enable pay-as-you-go insurance policies — have emerged in recent years. For example, you can purchase just a week’s worth of coverage from Hugo rather than committing to a full six-month or year-long plan. This means a lower down payment and no paying for a longer-term car insurance policy you don’t need.
Each state sets minimum amounts of coverage that drivers must purchase to drive legally. These minimum-coverage car insurance policies are the cheapest options around — though they offer less protection in the event of a serious claim.
If you can’t afford car insurance, you might instead use a friend’s car with non-owner car insurance. These cheaper policies enable you to drive a car that isn’t registered under your name — but you’re still protected if you get in an accident. Plus, non-owner car insurance is easy to cancel if you decide you no longer need it.
Having a lapse in car insurance can lead to higher rates down the road. Car insurance companies may see you as a higher risk to insure if you’ve gone a period without insurance. To offset these risks, they’ll often charge you higher monthly premiums. Improving your driving record afterward through safe driving can lower your monthly rates, even if you’ve had a recent lapse in coverage.
Here are answers to some commonly asked questions about no-deposit car insurance.
Auto-Owners has the cheapest liability-only insurance policy on average, with rates at $40 per month, according to Compare.com data. Rates can vary based on several factors, including your age, driving record, and type of vehicle, so the cheapest insurance for you may be different. Comparing quotes from multiple car insurance companies can help you find the best deal.
Drivers with poor credit who choose USAA have the lowest rates, on average, at $81 per month, according to Compare.com data. This is significantly lower than the $147 monthly average that drivers with low credit scores pay.
You can purchase non-owner car insurance if you occasionally drive a car that isn’t registered to you. If you only drive certain times a year, you may want to buy temporary car insurance from a company like Hugo, which allows you to pay by the month or even week.
Yes. The Zebra lets you compare quotes from a variety of insurance companies, which can help you pinpoint the cheapest option. Some users complain of inaccurate quotes, so it’s a good idea to compare your findings from The Zebra with other sources. Compare.com and Insurify are the best insurance comparison sites, according to our research.
Sources
J.D. Power, “2023 U.S. Auto Insurance Study,” Accessed March 21, 2024.
National Association of Insurance Commissioners, “A Shopping Tool for Auto Insurance,” Accessed March 21, 2024.
National Association of Insurance Commissioners, “2023 Property and Casualty Market Share,” Accessed March 21, 2024.
NOLO, “Driver's License Points from Tickets,” Accessed March 21, 2024.
Data scientists at Compare.com analyzed more than 50 million real-time auto insurance quotes from more than 75 partner insurers in order to compile the rates and statistics seen in this article. Compare.com’s auto insurance data includes coverage analysis and details on drivers’ vehicles, driving records, insurance histories, and demographic information.
All the rates listed in this article have been collected from a combination of real Compare.com quotes and external insurance rate data gathered in collaboration with Quadrant Information Services. Compare.com uses these observations to provide readers with insights into how auto insurance companies determine their premiums.
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Learn more about us, our team, and what makes us tick.
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A.M. Steinbach is a Brooklyn-based writer, editor, and content marketing strategist who has been writing for Compare.com since 2023. He's an expert in breaking down a diverse range of insurance topics into crisp, readable content.
A.M. has worked with major brands in insurance, tech, finance, and healthcare. He also contributes to The Average Joe, a personal finance newsletter that reaches more than 250,000 daily readers, and other notable publications.
Nick Versaw leads Compare.com's editorial department, where he and his team specialize in crafting helpful, easy-to-understand content about car insurance and other related topics. With nearly a decade of experience writing and editing insurance and personal finance articles, his work has helped readers discover substantial savings on necessary expenses, including insurance, transportation, health care, and more. As an award-winning writer, Nick has seen his work published in countless renowned publications, such as the Washington Post, Los Angeles Times, and U.S. News & World Report. He graduated with Latin honors from Virginia Commonwealth University, where he earned his Bachelor's Degree in Digital Journalism.
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