Do you get your deposit back from auto insurance?
Although insurance companies don't offer auto insurance deposit refunds after your application approval, deposit funds get applied to coverage costs. Keep reading to learn more about auto insurance deposits.
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Brad Larson
Licensed Insurance Agent
Brad Larson has been in the insurance industry for over 16 years. He specializes in helping clients navigate the claims process, with a particular emphasis on coverage analysis. He received his bachelor’s degree from the University of Utah in Political Science. He also holds an Associate in Claims (AIC) and Associate in General Insurance (AINS) designations, as well as a Utah Property and Casual...
Licensed Insurance Agent
UPDATED: Nov 9, 2023
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Advertiser Disclosure: We strive to help you make confident auto insurance decisions. Comparison shopping should be easy. We are not affiliated with any one auto insurance provider and cannot guarantee quotes from any single provider. Our partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different companies please enter your ZIP code on this page to use the free quote tool. The more quotes you compare, the more chances to save.
Editorial Guidelines: We are a free online resource for anyone interested in learning more about auto insurance. Our goal is to be an objective, third-party resource for everything auto insurance related. We update our site regularly, and all content is reviewed by auto insurance experts.
UPDATED: Nov 9, 2023
It’s all about you. We want to help you make the right coverage choices.
Advertiser Disclosure: We strive to help you make confident auto insurance decisions. Comparison shopping should be easy. We are not affiliated with any one auto insurance provider and cannot guarantee quotes from any single provider. Our partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different companies please enter your ZIP code on this page to use the free quote tool. The more quotes you compare, the more chances to save.
On This Page
- Most auto insurance companies require a deposit with an application
- Deposits are not refunded but do apply to coverage costs
- If you cancel your policy, you may receive a prorated refund
Almost all U.S. states, except New Hampshire and Virginia, require drivers to carry auto insurance, meaning most Americans will need to apply for coverage eventually. Generally, when applying for coverage, insurers will require a deposit or down payment alongside an approved application.
The initial deposit required with the application applies toward future coverage payments. Keep reading to learn more about auto insurance deposits, where they go, and if you can get a refund for them.
Is there such a thing as an auto insurance deposit refund?
In short, there is no such thing as an auto insurance deposit refund for existing customers. A deposit or insurance down payment refund contradicts the principle of a deposit.
For example, companies generally require deposits to hold a consumer’s spot for a service or to guarantee payment if a consumer fails to make one in the future. In other words, car insurance deposits function like down payments in that the money due alongside an approved application is the first payment you make towards insurance coverage.
Deposits Apply to Future Payments
In a sense, consumers do get their down payments back after successfully applying for auto insurance. While the money does not refund in a traditional sense, it is not lost either. Instead, the down payment applies to future payments required to remain an insured driver.
After an auto insurance company receives your down payment, your car insurance coverage will begin immediately, even while an application is underwritten or double-checked for any inconsistencies.
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What is the average cost of an auto insurance down payment?
Several factors influence the average cost of an auto insurance down payment. In certain situations, consumers may avoid down payment costs entirely.
If you want to avoid an auto insurance down payment altogether, you must pay your auto insurance rates in full. Paying off rates for a full six months or a year after you successfully apply will bypass a down payment, and your coverage will begin immediately, even if an application is in the review process.
If you set up an auto insurance payment plan requiring you to make monthly or quarterly payments, the down payment amount will vary by individual.
Examples of Typical Down Payments
Typically, auto insurance companies will ask for a down payment amount equal to the first two months of the total cost. Sometimes, companies ask consumers to pay a fraction of the entire cost.
Whatever the amount, your down payment applies to pay for your coverage.
How do insurers estimate down payments?
Down payment costs depend on an individual’s auto insurance payments, which are influenced by several elements, including:
- Demographics, such as age, gender, and relationship status
- Credit rating
- Licensing and driving history
- Vehicle usage and type
- Mileage
Additionally, auto insurance companies set company-wide rates and file them for approval through the residing state.
Average Annual Auto Insurance Rates From 5 Companies
Allstate, Geico, Nationwide, Progressive, and State Farm offer unique auto insurance rates based on high, medium, and low coverage. Since insurers look at your rates when setting a deposit, check out the average annual rates for insurance listed below to get a sense of how much your deposit might be.
Average Annual Car Insurance Rates by Coverage Type
Auto Insurance Company Average Annual Rate (High Coverage) Average Annual Rate (Medium Coverage) Average Annual Rate (Low Coverage)
Allstate $5,139.02 $4,896.81 $4,628.03
Geico $3,429.14 $3,213.97 $3,001.91
Nationwide $3,505.37 $3,449.80 $3,394.83
Progressive $4,350.96 $4,018.46 $3,737.13
State Farm $3,454.80 $3,269.80 $3,055.40
Any down payment you make gets applied towards your policy’s full annual rate.
When will auto insurance companies refund deposits?
Auto insurance companies usually refund deposits when a driver’s auto insurance policy gets rescinded or canceled. Submitting fraudulent claims or purposely failing to disclose important aspects of your driving history allows an insurance company to rescind your insurance coverage.
If you innocently forget to provide important information to your insurance company, the company will typically still offer coverage, though rates may increase in this case.
If your insurance company rescinds your auto policy, it will typically credit your account or send a refund check detailing the amount you paid towards your coverage.
If you are unhappy with an increase in your insurance rates, you could cancel your auto coverage. The cancellation will typically take effect immediately, though you can sometimes choose a future date. Some insurance companies will ask that you request a cancellation in writing — keep any such request for your records.
Voluntary cancellation of your auto insurance will generally result in a refund. You should get a portion of your deposit back before your next installment is due.
A deposit brings down any balance you owe, so since it applies to rates, you should have leftover funds if you voluntarily cancel your policy.
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The Bottom Line About Insurance Deposit Refunds
Most insurers require a deposit when your application gets approved, and the cost depends on the rates your insurer calculates. You can successfully bypass a deposit by paying off rates in full for six months or a year.
You won’t get your deposit back as an existing customer since this deposit applies to future rates. However, if you voluntarily cancel your policy or your insurer rescinds coverage, you should receive a prorated refund.
Frequently Asked Questions
Do you get your deposit back from auto insurance?
Auto insurance policies typically do not require a deposit. Instead, insurance premiums are paid in advance for the coverage period, usually in monthly or annual installments. Therefore, there is usually no deposit to be returned.
What is a deposit in relation to auto insurance?
In the context of auto insurance, a deposit is not commonly associated with standard insurance policies. However, in some specific cases, such as high-risk drivers or individuals with poor credit history, insurance companies may require an upfront payment or a larger down payment as a way to secure coverage. This amount is not technically a deposit but rather an upfront payment towards the premium.
Are there any circumstances where you may get a refund or partial refund from auto insurance?
Yes, there are circumstances where you may receive a refund or partial refund from your auto insurance. Some common situations include:
- Cancellation of policy: If you cancel your auto insurance policy before the coverage period ends, you may be eligible for a refund of the unused portion of the premium. The refund amount will depend on the insurance company’s cancellation policies and any applicable fees.
- Overpayment: If you accidentally overpay your insurance premium, you can request a refund for the excess amount paid. It’s important to contact your insurance company and provide them with the necessary information to process the refund.
- Policy changes: If you make changes to your policy that result in a decrease in premium, such as removing a vehicle or reducing coverage limits, you may be entitled to a refund for the difference in premium.
How can I request a refund or inquire about a deposit with my auto insurance company?
If you believe you are entitled to a refund or have questions about a deposit, it’s best to contact your auto insurance company directly. Reach out to their customer service or billing department and provide them with the details of your request or inquiry. They will guide you through the process and provide information specific to your policy and circumstances.
Are there any fees or deductions that can affect the refund amount?
Depending on the insurance company’s policies, there may be fees or deductions that can affect the refund amount. Some common examples include cancellation fees, administrative fees, or non-refundable portions of the premium. It’s important to review your insurance policy or contact your insurance provider to understand any applicable fees or deductions that may impact the refund amount.
How long does it take to receive a refund from auto insurance?
The time it takes to receive a refund from auto insurance can vary depending on the insurance company and the specific circumstances. In some cases, refunds may be processed relatively quickly, while in others, it may take several weeks to receive the refund. It’s advisable to contact your insurance provider and inquire about their refund processing timeline to have a better understanding of what to expect.
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Enter your ZIP code below to view companies that have cheap auto insurance rates.
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Brad Larson
Licensed Insurance Agent
Brad Larson has been in the insurance industry for over 16 years. He specializes in helping clients navigate the claims process, with a particular emphasis on coverage analysis. He received his bachelor’s degree from the University of Utah in Political Science. He also holds an Associate in Claims (AIC) and Associate in General Insurance (AINS) designations, as well as a Utah Property and Casual...
Licensed Insurance Agent
Editorial Guidelines: We are a free online resource for anyone interested in learning more about auto insurance. Our goal is to be an objective, third-party resource for everything auto insurance related. We update our site regularly, and all content is reviewed by auto insurance experts.