What does it mean when a policy is ‘fully paid up?’

I started Insurance Blog by Chris™ because I have a passion for insurance. Here at the blog, our job is to educate and inform people about the best insurance for them.
Since then, we have grown into national brands with a large team of researchers helping people understand all forms of insurance.

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Rachael Brennan has been working in the insurance industry since 2006 when she began working as a licensed insurance representative for 21st Century Insurance, during which time she earned her Property and Casualty license in all 50 states.
After several years she expanded her insurance expertise, earning her license in Health and AD&D insurance as well. She has worked for small health insu…

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Reviewed by

Rachael Brennan

Licensed Insurance Agent

UPDATED: Feb 10, 2022

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Here's the Scoop

  •  Making one large payment that covers the entirety of your policy means that your insurance policy is fully paid-up
  • You can often get a discount from insurance companies if you decide to pay for your policy in full
  • You can keep your rates low by shopping online and making sure every discount you qualify for is applied to your quote

In this day and age, more and more drivers are trying to find ways to save money. Some are moving back into their family homes, while others are considering cutting down on their coverage just so they can afford their car insurance. While moving back in with the family could be a sound decision for many people, cutting down on your necessary insurance coverage could end up doing you more harm than good in the long run.

With today’s technology, you can find cheap insurance companies that can help you to get the coverage you need and offer affordable fully paid-up car insurance from the palm of your hand. The next time you use your smartphone to surf the net, try looking up some fully paid-up car insurance rates. You may be shocked at how much you could save by paying for your entire policy period upfront.

Keep reading to learn more about paid-up car insurance options and how to find the best policy for your needs online.

You don’t have to wait to start shopping for fully paid-up insurance policies. Enter your ZIP code to start receiving free car insurance quotes right away.

Table of Contents

What is a paid-up insurance option?

If a car insurance company provides fully paid-up car insurance, that means that you have a choice between making a monthly payment for your insurance coverage and paying for the entire policy period at once. When you request fully paid-up car insurance quotes online, you’ll notice that many of them are less expensive than policies that require a payment to be made once a month.

This is because most insurance companies want to reward drivers who pay up-front for their policy since there is no chance that payment will be missed during the policy period. This is usually known as a paid-in-full discount.

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What are the benefits of paying for car insurance in full?

The decision to make one lump sum payment for your car insurance may seem foolish at face value, but you can derive a lot of good from making the choice to buy fully paid-up car insurance. For instance, you won’t have to worry about your policy being canceled because you forgot to make a payment. Even better, if you find a cheaper policy while shopping online, you could receive a refund when you cancel your current policy.

Bear in mind that if you have a paid-in-full car insurance policy, you will not be able to receive paid-up additions like you would if you had a whole life insurance policy. Now you may be wondering to yourself, “What are paid-up additions?”

Paid-Up Additions

If you owned a life insurance policy that allowed you to make use of paid-up additions, you would be able to use the dividends accrued by that policy to buy more insurance coverage. Sadly, you don’t have the same option with car insurance.

How much do drivers pay for car insurance?

No two drivers will pay the same for their insurance even if they both get a paid-in-full discount from the same insurance company. You see, insurance companies produce unique rates that reflect your risk level as an individual, but your preference for insurance coverage has a big effect on your rates as well.

Let’s say that you and your neighbor both decide to purchase insurance from the same insurance company. The pair of you are the same age, gender, and both have decent credit scores; however, your neighbor drives a 2005 Toyota Camry, and you drive a 2021 Ford F150. Your neighbor will probably only purchase liability coverage for their older car while you will most likely have full coverage on your new vehicle.

Full coverage will always cost more than liability simply because you get so much for it. Below, you can see just how drastic the difference between liability only and full coverage can be in your home state:

Car Insurance Rates by State

State Monthly Liability-Only Car Insurance Rates Monthly Full Coverage Car Insurance Rates
Arizona $41 $81
California $39 $82
Georgia $41 $87
Illinois $36 $74
Indiana $31 $63
Louisiana $61 $117
Maryland $50 $93
Missouri $33 $73
Nebraska $29 $69
Ohio $31 $66
Oklahoma $37 $84
Pennsylvania $41 $81
Texas $42 $92
Utah $39 $73
Wisconsin $30 $61
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Now, if you’re afraid that you won’t be able to afford full coverage on your vehicle after reviewing that chart, you don’t need to worry. The best car insurance companies usually offer many more discounts in addition to a paid-in-full discount.

How can drivers keep their rates low?

Without a doubt, the best way to reduce your rates is to continuously follow safe driving practices, make sure you have a good credit score, and try to limit the number of claims you make. However, you can and should regularly review your policy to verify that every discount you qualify for has been applied.

The next time you set aside time to review your policy, use this list of common car insurance discounts to verify that you aren’t missing out on any opportunities to save money.

  • Customer loyalty
  • Early sign up
  • Safe driver
  • VIN etching
  • Anti-theft device
  • ABS
  • Distant student
  • Senior driver
  • Daytime running lights
  • Good student
  • Emergency deployment
  • Forward collision warning
  • Lane assist
  • Defensive driving course
  • Senior driver
  • Low annual mileage

You may have noticed after looking at this list that insurance companies are quite eager to reward drivers who have vehicles that can help them avoid accidents as this can mean fewer claim pay-outs for the insurance company. It could behoove you to keep this in mind the next time you’re shopping for a new car.

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Fully Paid-Up Car Insurance: What You Need to Know

When you have a fully paid-up insurance policy, that means that you have paid for your whole policy period upfront.

Insurance companies like to avoid risk so if you decide to pay for your insurance policy in full, you are eliminating the risk that you may miss a payment during your policy period. This paid-up option could earn you a discount from the insurance company.

While a paid-in-full discount is always nice to have, there are other ways to save on your insurance. If you work to create a great driving record and keep your credit score in good standing, you could see your rates drop. Of course, other discounts like a safe driver or customer loyalty can help keep your rates low as well.

Don’t wait to start comparing fully paid-up insurance quotes; enter your ZIP code to get free quotes from insurance companies near your city today.