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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Rachel Bodine graduated from college with a BA in English. She has since worked as a Feature Writer in the insurance industry and gained a deep knowledge of state and countrywide insurance laws and rates. Her research and writing focus on helping readers understand their insurance coverage and how to find savings. Her expert advice on insurance has been featured on sites like PhotoEnforced, All...

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Written by Rachel Bodine
Feature Writer Rachel Bodine

Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years (BBB A+). He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like and Safeco. He reviews content, ensuring that ex...

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent Daniel Walker

UPDATED: Jun 10, 2022

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Things to remember...

  • 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 CompanyAverage Annual Rate (High Coverage)Average Annual Rate (Medium Coverage)Average Annual Rate (Low Coverage)
State Farm$3,454.80$3,269.80$3,055.40
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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.

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