Have you ever faced the difficulty of having to pay car insurance, but not having the required deposit upfront? You need not worry about the difficulty anymore.
There is tough competition among insurance companies, and this competition has resulted in car insurance companies providing several options to their clients.
One of the main advantages is that the insurance companies can now provide insurance without deposits to its customers.
The reason why you normally have to pay a deposit to obtain insurance is that, insurance is a contract, and any contract involves some deposit with which you need to start.
In no deposit car insurance policies, any payment you make to the insurance company is divided into 12 months or on the basis of a particular denomination followed by the specific insurance company.
So, you can pay the insurance amount as monthly fees, and there is no upfront deposit involved in the scheme.
This means, you can start availing the insurance services by paying just a fraction of your total insurance cost.
No-deposit insurance scheme is particularly useful for people who face a restrain in arranging finances to pay insurance amount upfront.
Sometimes, you may see that it is easier to pay the amount in installments, rather than give the whole amount at one go.
Another category who can make use of no deposit car insurance scheme is students.
Most students may find it difficult to pay the entire insurance amount at once.
They can make use of this facility to pay in small installments.
But, you should not forget that insurance involves a lot of risk in it and your insurance premium is based on the number of warranty claims that you make.
This means, if you make a big number of claims, the amount that you might have to pay as premium will be high too.
This no deposit insurance scheme is so popular these days that there are a large number of companies that support it and have similar schemes for its customers.
In other words, no deposit insurance schemes have made car insurance affordable to everybody.
But there are certain cons associated with such schemes as well.
You need to remember that no company would ever want to suffer a loss to provide insurance facility to their clients.
In turn insurance companies are gaining a lot of profit through these schemes.
When you choose a no deposit insurance scheme, total amount you will have to pay is your premium plus the profit that is due tom the insurance company.
So, in effect, you end up paying more than the amount you would have had to pay as a one-time premium.
But, in comparison to the pros it offers, cons are very minimal in nature.