No-Deposit Car Insurance (2024)

No-deposit car insurance doesn’t actually exist, but you still have plenty of opportunities to save on car insurance.

Elizabeth Rivelli
Elizabeth Rivelli
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Elizabeth has extensive insurance industry experience, having written for Insureon, Rate Retriever, and Insurify. She’s also finance and insurance editor for Car and Driver.

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Evelyn Pimplaskar
Evelyn PimplaskarEditor-in-Chief, Director of Content
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Evelyn leads Insurify’s content team. She’s passionate about creating empowering content to help people transform their financial lives and make sound insurance-buying decisions.

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Daniel Roccato
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  • Clinical Professor of Finance, University of San Diego

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Konstantin Halachev
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Updated February 28, 2024 at 4:00 PM PST

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Almost every reputable car insurance company will require some sort of deposit or down payment before providing you with coverage. But if you’re strapped for cash, some insurers only require the first month’s premium as a deposit, rather than a separate fee.

You can find other ways to save money on car insurance — including discounts, payment plans, and comparison shopping — to get the lowest rates available to you.

Quick Facts
  • If you choose to pay for your new car insurance policy in installments, the insurance company will require a down payment to initiate the policy.[1]

  • Your down payment may be the first month’s premium paid in advance or a percentage of the total premium.

  • A down payment counts toward your total premium. It’s not an additional fee.

No-deposit car insurance doesn’t exist

Car insurance with no deposit or down payment doesn’t exist, as insurers don’t want to take on the risk of insuring you without some sort of payment. 

The misconception of no-deposit car insurance may come from the differences in down payment amounts among companies and for different drivers. Deposit amounts can vary based on many factors, including the insurance company, your state, driving history, credit history, and more.

For example: Let’s say your insurer last year only required you to pay the first month’s installment as a down payment. But this year, you got into an at-fault accident, and now your new insurer wants more than one month’s premium as a deposit.

You may think the deposit amount is your first month’s premium plus an added fee — but it’s really just a higher percentage of the total premium.[2]

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Why do insurance companies require a down payment?

Insurance companies require a down payment because it protects them from significant risk during the first month of the policy. When you sign up for car insurance coverage, your insurer is agreeing to take on financial responsibility for various claims outlined in the policy, so it needs a deposit or down payment to offset that risk.

Is no-deposit car insurance a scam?

You should be wary of any car insurance company offering no-deposit car insurance. No reliable insurance company will give you a policy without some sort of down payment.

Keep an eye out for insurance companies that require the first month’s payment as a deposit rather than a separate charge. They may advertise the policy as “no deposit” since the money goes toward your policy costs, but you’ll still need to pay this money before your coverage kicks in.

If a company claims to offer true no-deposit or zero-down car insurance without requiring any money up front, it’s likely a scam. No matter where you buy your insurance, it’s smart to read reviews and check ratings before committing to a policy.

How to lower your down payment

If you want to find the best deal on car insurance and lower your down payment, you can do a few things to save money. Follow these tips to decrease your deposit and monthly premium:

1. Compare multiple car insurance quotes

2. Consider pay-as-you-go insurance

3. Ask for discounts

4. Reduce car insurance coverage

Compare multiple car insurance quotes

Best for: All drivers

You should always compare car insurance quotes before buying a policy. Every insurer calculates rates differently, and each driver has unique characteristics, such as their location, driving record, and age, so rates can differ drastically. The cheapest car insurance company for you may be different from the cheapest option for your parents, for example, given their age.

Since most insurers will ask for the first month’s premium as a deposit, finding cheaper insurance through quote comparison can lower your down payment.

Consider pay-as-you-go insurance

Best for: Safe or low-mileage drivers

If you don’t drive much, you may benefit from pay-as-you-go or pay-per-mile insurance. These types of insurance are similar though not entirely the same.

Pay-as-you-go insurance — also known as usage-based insurance — charges you based on how much and how well you drive.[3] Pay-per-mile insurance charges you based on how many miles you drive on top of a base rate.

These types of policies typically have lower down payment requirements. But they’re not without risk. You may not get the same level of coverage as you would with typical full-coverage car insurance. With pay-as-you-go insurance, the insurer can even penalize you for poor driving, so consider how carefully you drive before signing up.

Ask for discounts

Best for: Most drivers

Most car insurance companies offer a variety of car insurance discounts. Consider your situation and which offers you may qualify for, such as good student, loyalty, and defensive driving discounts. Ask your insurance agent to check for you, or simply research an insurer’s website to learn which discounts it offers.

Reduce car insurance coverage

Best for: Low-risk drivers, drivers with no financing costs

Consider reducing your coverage level. Liability car insurance costs significantly less than full coverage. But it won’t cover damages from collisions or weather damage.

Liability coverage is only good for drivers who don’t drive frequently or can afford to pay vehicle expenses out of pocket. If you drive a lot and wouldn’t be able to pay for significant vehicle repairs, you should probably carry full coverage. If you took out a loan to pay for your car or lease it, your lender or leasing company will require you to carry full coverage anyway.

The following table illustrates the difference in coverage costs among top insurers, according to Insurify data.

Insurance CompanyLiability OnlyFull Coverage% Difference
American Family$76$171-56%
Farmers$107$238-55%
Travelers$89$195-54%
Nationwide$84$184-54%
USAA$45$98-54%
Allstate$62$135-54%
The General$117$252-54%
GEICO$53$114-53%
State Farm$52$110-53%
Liberty Mutual$93$188-51%
Progressive$82$147-44%

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Disclaimer: Table data sourced from real-time quotes from Insurify's 50-plus partner insurance providers and quote estimates from Quadrant Information Services. Actual quotes may vary based on the policy buyer's unique driver profile.

No-deposit car insurance FAQs

If you’re on a budget, it’s possible to find affordable car insurance. Here’s some additional information that might help as you research different policies.

  • Do all car insurance companies require a deposit or down payment?

    Yes. All car insurance companies require some form of payment up front before you can get coverage. This is a way for insurers to reduce risk.

  • Which auto insurance companies don’t require a down payment?

    Every car insurance company requires a down payment in the form of the first month’s premium. However, many car insurance companies don’t require a secondary deposit on top of the initial premium, including: 

    This list is not exhaustive, so it’s a good idea to contact a car insurance company directly if you have questions about its down payment requirements.

  • Which companies have the cheapest car insurance?

    COUNTRY Financial, NJM, and Auto-Owners have the lowest car insurance rates, according to Insurify data. But not every driver may be able to get coverage from these companies.

    State Farm and GEICO are two nationally available insurance companies that offer some of the cheapest policies, so getting quotes from them is certainly a good start.

    Every driver is unique — rates depend on different things like your driving record, credit score, and your ZIP code. You may find cheaper insurance with another company, so always compare quotes from multiple insurers before buying a policy.

Methodology

Insurify data scientists analyzed more than 90 million quotes served to car insurance applicants in Insurify’s proprietary database to calculate the premium averages displayed on this page. These premiums are real quotes that come directly from Insurify’s 50+ partner insurance companies in all 50 states and Washington, D.C. Quote averages represent the median price for a quote across the given coverage level, driver subset, and geographic area.

Unless otherwise specified, quoted rates reflect the average cost for drivers between 20 and 70 years old with a clean driving record and average or better credit (a credit score of 600 or higher).

Liability-only premium averages correspond to policies with the following coverage limits:

  • Bodily injury limits between state-minimum rates and $50,000 per person, $100,000 per accident
  • Property damage limits between $10,000 and $50,000
  • No additional coverage
Full-coverage premium averages correspond to the same bodily injury and property damage limits in addition to:
  • Comprehensive coverage with a $1,000 deductible
  • Collision coverage with a $1,000 deductible

Quotes for Allstate, Farmers, GEICO, State Farm, and USAA are estimates based on Quadrant Information Services’ database of auto insurance rates.

Sources

  1. Direct Auto Insurance. "About Car Insurance Down Payments." Accessed February 15, 2024
  2. Progressive. "Can I get car insurance with no down payment?." Accessed February 15, 2024
  3. Insurance Information Institute. "Background on: Pay-as-you drive auto insurance (telematics)." Accessed February 15, 2024
Elizabeth Rivelli
Elizabeth Rivelli

Elizabeth Rivelli is a freelance writer covering insurance and personal finance. She has extensive knowledge of various insurance lines, including property and casualty, health, and life insurance. Her byline has been featured in dozens of publications, including Investopedia, Forbes, Bankrate, NextAdvisor, and Insurance.com

Evelyn Pimplaskar
Edited byEvelyn PimplaskarEditor-in-Chief, Director of Content
Evelyn Pimplaskar
Evelyn PimplaskarEditor-in-Chief, Director of Content
  • 10+ years in insurance and personal finance content

  • 30+ years in media, PR, and content creation

Evelyn leads Insurify’s content team. She’s passionate about creating empowering content to help people transform their financial lives and make sound insurance-buying decisions.

Featured in

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Daniel Roccato
Reviewed byDaniel RoccatoAdvisor
Headshot of industry expert Daniel Roccato
Daniel RoccatoAdvisor
  • 30+ years in financial services

  • Clinical Professor of Finance, University of San Diego

Dan is a well-recognized and widely quoted financial services expert, regularly appearing in a variety of national and local media as a subject matter expert.

Konstantin Halachev
Data reviewed byKonstantin HalachevVice President of Engineering
Headshot of Konstantin Halachev, VP of Engineering at Insurify
Konstantin HalachevVice President of Engineering
  • 7+ years experience in data analysis

  • Ph.D. in Computational Biology

Konstantin has led data teams across multiple industries, including insurance, travel, and biology. He’s led Insurify’s engineering team for more than three years.

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