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.

5+ years writing insurance and personal finance topics

Auto, home, health, and life insurance expertise

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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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.

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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.

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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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Updated May 9, 2024

Save up to $717 by comparing quotes from the top 100+ insurance companies

At Insurify, our goal is to help customers compare insurance products and find the best policy for them. We strive to provide open, honest, and unbiased information about the insurance products and services we review. Our hard-working team of data analysts, insurance experts, insurance agents, editors and writers, has put in thousands of hours of research to create the content found on our site.

We do receive compensation when a sale or referral occurs from many of the insurance providers and marketing partners on our site. That may impact which products we display and where they appear on our site. But it does not influence our meticulously researched editorial content, what we write about, or any reviews or recommendations we may make. We do not guarantee favorable reviews or any coverage at all in exchange for compensation.

Cheapest recent rates

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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.

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]

Find Coverage with a Low Down Payment

Minimum-coverage policies start at $20/mo.

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.

Here are the top insurers for pay-as-you-go car insurance.

Hugo

Launched in 2021, Hugo is currently the only insurance company offering on-demand car insurance. Drivers open an account with Hugo without paying a down payment, and choose their policy term. Hugo sells policies for three, seven, 14, or 30 days, and offers three tiers of coverage: flex, which meets state-minimum liability requirements; basic, which adds medical and accidental death coverage to liability, and full, which adds comprehensive and collision to the basic plan. Using the Hugo app, drivers can turn coverage on and off so they only pay for the days when they’re actually using the coverage.

Short-term policies

No down payment required

Flexible, pay-as-you-go insurance

Only available in 13 states

No discounts and limited options to customize coverages

Bad Business

Hugo gradually increases prices like other insurance companies

Great Option for Liability Coverage

Metromile

Owned by Lemondate Insurance, Metromile is a pay-per-mile car insurance company that debuted in San Francisco in 2011. The company tracks customer mileage through an in-car device. Customers pay a monthly rate plus a set amount (usually pennies) for every mile they drive. Low-mileage drivers could realize significant savings with Metromile: the company says customers who drive 2,500 miles or fewer can save about $947 annually. However, the company isn’t rated by A.M. Best, and has more than seven times the number of expected complaints in the National Association of Insurance Commissioner’s Consumer Complaints Index.

Low mileage drivers could realize significant savings

Most full-coverage policies include free pet injury protection for covered claims

Very high rate of customer complaints

Not available in every state

In the beginning, you're happy, and then you're not!

Mile Auto

Nationwide

Nationwide offers one of the most widely available pay-per-mile car insurance programs. SmartMiles allows low-mileage drivers to pay a monthly base rate plus a per-mile charge each month. You participate in the program either with a telematics device that goes in your car or with an eligible connected car.

Available in all states except Alaska, Hawaii, Louisiana, North Carolina, New York, and Oklahoma

10% renewal discount available for safe driving behavior

Requires telematics tracking

Poor driving habits could negatively affect your rates

Overpricing the Customer

Nationwide is a good insurance company, but I'm looking for a cheaper place with the same coverage. My premiums increase every 6 months for no apparent reason. I haven't had any accidents, tickets, DUIs, or anything else. I used to wonder why a policy went to 6 months instead of 12, but I finally figured it out. They can raise your coverage twice in a year, which seems very unfair. I'm retired.

Nationwide is not on your side

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.

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.

Read Editorial Guidelines

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: 

Alliance

Allstate

Farmers

Kemper

Nationwide

Progressive

SafeAuto

State Farm

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.

Sources

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. 

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.

Read Editorial Guidelines

Featured in

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.

Read Editorial Guidelines

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.

Read Editorial Guidelines

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