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Monthly charge for policy payment plan

Posted Mon November 2, 2009 7:49 pm, by Darren S. written to State Farm Insurance

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I have been a State Farm customer (insurance for auto, condo, and personal articles) since 2000. Instead of utilizing a traditional payment plan of twice a year, I choose to pay in monthly installments, for which State Farm charges me an additional $3 per month because I choose this option. I spoke with one of my agent's assistants who would look into the matter but has not returned my call. Obviously, $36 per year is not a large sum of money but I'm more annoyed at the principle of penalizing me for making more payments per year (an option that I am given and I choose).

It would be great for State Farm to remove this monthly fee and be happy that I have been a steady consistent customer with only one claim in 9 years.


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by shewakesupl0nely Posted Thu November 5, 2009 @ 9:15 AM

i use liberty mutual and they charge $6 a month to pay in
installments.

Reply
by Richard S. Posted Wed November 4, 2009 @ 11:37 AM

Farmers Insurance does this as well. I was told I get a discount if I
have my monthly payment taken out of my checking account automatically
every month. I get a $3.00 discount. However I am then charged $2.00
for this feature. In the end I do get a discount but not as much as it
should be. I think this is rather deceptive.

Reply

by MA Cunningham Posted Wed November 4, 2009 @ 8:55 AM

an direct debit option?

I have Nationwide and while they charge slightly more if you split
your half year premium into 6 payments, they eliminate that charge if
you agree to have the payment auto-deducted from your bank account
every month.

Might be a possible solution if you are paying at the same time every
month anyway.

Reply


Yes State Farm offers that option (that's how I pay) n/t by PepperElf Wed November 4, 2009 @ 9:50 AM

by Retail Veteran Posted Tue November 3, 2009 @ 8:50 PM

I have Commerce Insurance and they have the same fee for spreading out
your payments over the year. It doesn't matter if you pay monthly,
quarterly, or twice a year. There is a small fee per payment. If I pay
the entire amount at the beginning of the year, then there is no fee.
It explains it in the paperwork I get with my renewal every year. I
don't mind paying the extra $3 for the convenience of being able to
spread out my payments.

Reply

by RedheadwGlasses Posted Tue November 3, 2009 @ 12:38 PM

I have been with State Farm for 15 years, with four policies (home,
auto, motorcycle, disability) and have only one claim. The monthly
fee is told to you up front when you get insurance and it's standard.
It's worth it to me to do that rather than have to pay a large lump
sum once or twice a year.

People who handle their money better and plan ahead better get
rewarded by not having that monthly fee.

Reply

by LadyMac Posted Tue November 3, 2009 @ 9:13 AM

An alternative might be to simply split your semi-annual payments. I
do that and pay 1/2 of the bill plus $2. It's $4 a year versus $36.

I understand it's the principal of the thing, but I think it's a
convenience fee as it costs them money to process your payments.

Reply


by Harleycat Posted Tue November 3, 2009 @ 8:56 AM

Geico and Nationwide do this as well.

Reply

by kewltazdude Posted Tue November 3, 2009 @ 8:47 AM

You might check with them to see if they have an autodraft policy. My
insurance carrier also charges a $3 fee if you are paying monthly;
however, they will waive the fee if you sign up to have your premium
autodrafted each month (which I find easier to do anyways). :)

Reply


good point - it might mean you have to issue a check before the deadline each month but it might be cheaper... n/t by PepperElf Tue November 3, 2009 @ 10:48 AM

by PepperElf Posted Tue November 3, 2009 @ 7:18 AM

i don't know about you but... with the state farm agent i go to,
they're within a mile or two of my apartment.

why not visit them in person to ask, instead of waiting for a
call-back?

Reply


by Just Jeffrey Posted Tue November 3, 2009 @ 6:20 AM

This is very typical with insurance. My car and home insurance
companies do the same thing.

They are upfront about it, though. Sounds like State Farm hid this
from you.

However, most companies will charge you said fee if you just pay, but
they don't bill, on a monthly basis. In other words, continue sending
them a payment every month. You'll only be billed every 6 months,
though.

No promise that they won't catch on that it's costing them more to
process your payments (which is another reason for the surcharge) each
month.

Anyway, no harm in asking for the fee to be waived. Worst that can
happen is that they say "no." And, at least, now you know that this
is common in the industry (although I'm sure there are companies that
don't do it) and that it's because each bill/payment costs them.

Reply

by Venice Posted Mon November 2, 2009 @ 11:24 PM

My husband has had State Farm insurance for over forty years, and
together we've had State Farm for all of our coverage for over thirty
years. If we opt for monthly bills, we are charged a fee. This is a
service provided by State Farm for your convenience. It costs the
company money to send out monthly bills. If you don't want to pay
$3.00 each month, I think you can be billed quarterly or
semi-annually, which would reduce the fees.

Reply

by RowdyRetailer Posted Mon November 2, 2009 @ 11:02 PM

Most insurance companies do this.

I avoid this by prepaying for the next renewal. This requires less
paperwork and billing on their part.

More paperwork and billing gets your a 3 dollar surcharge.


Good Day

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