What does it mean when a policy is “fully paid up”?

In auto insurance, fully paid up means your policy is up-to-date, and you don't owe any premium payments. When you fully pay up your auto insurance, you process your entire annual payment at once in return for insurance coverage throughout the year. As a result, you will avoid any late fees tacked on to missing payments, and you can earn between 6% and 12% off your auto insurance rates with a paid-in-full discount.

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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
Insurance Feature Writer Rachel Bodine

Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products including home, life, auto, and commercial and working directly with insurance customers to understand their needs. She has since used that knowledge in her more than ten years as a writer, largely in the insurance...

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Reviewed by Leslie Kasperowicz
Farmers CSR for 4 Years Leslie Kasperowicz

UPDATED: Jun 6, 2022

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What You Should Know

  • “Fully paid up” means that your auto insurance coverage is up-to-date and you don’t owe any premium payments
  • Fully paid up auto insurance qualifies for a 6%-12% discount with some of the leading insurance companies in the country
  • If your auto insurance is fully paid up, you won’t have to worry about a lapse in coverage as long as you remember to renew your policy at the end of the year

When your auto insurance policy is fully paid up, your coverage is up-to-date. As a result, you won’t have to pay any more premiums until your next renewal date. 

Most insurance companies allow drivers to pay their premiums monthly, biannually, or annually. If you choose the paid up option, that means you will pay your annual auto insurance premiums up-front on your policy’s start date. This way, you won’t have to remember monthly payment dates. You may even receive a discount as well for paying your policy in full.

Understanding auto insurance policies will give you a better idea of what it means when your policy is “fully paid up.” Read our guide to learn more about insurance premiums and policy types to determine if it’s advisable for you to pay all of your premiums up-front.

If you’re uncertain as to whether or not your insurance company offers a fully paid up discount, enter your ZIP code above to search for more affordable auto insurance companies in your area.

What does “fully paid up” mean?

“Fully paid up” car insurance implies that, rather than paying a monthly insurance premium, you decide to pay your total annual rate all at once.

Can you pay for auto insurance up-front for the whole year? Depending on your insurer, you can fully pay up your policy online, over the phone, or by mail with a check or money order. 

What happens when you pay your auto insurance in full? First, you can drive confidently, knowing that your insurance policy covers you. You’ll never be charged late fees because you won’t forget a monthly payment. You also won’t have to worry about a lapse in coverage, as long as you remember to renew your policy at the end of the year.

Is it smart to pay auto insurance in full?

Is auto insurance paid in advance? Yes, you pay up-front for coverage in case you get into a future accident or collision. Insurance companies like it when drivers have fully paid up policies because they receive a large lump sum of cash up-front that you may never use if you do not ever file a claim. 

Companies will often reward drivers with cheaper rates for paying in full. However, your budget and personal preferences will determine whether or not it’s beneficial to pay your car insurance in full.

For example, if your auto insurance company only offers a tiny discount (i.e., 5% or less), it may not be worth it. You may prefer to pay the smaller monthly premium if it’s only going to cost you a few more dollars overall.

Examine the table below to view average annual rates from the top auto insurance companies in the country. This can help you decide if your budget might benefit from a paid up insurance policy:

Average Annual Auto Insurance Rates by Company

CompanyAverage Annual Auto Insurance Rates
Allstate$4,533
American Family$3,699
Farmers$3,910
GEICO$3,074
Liberty Mutual$5,296
Nationwide$3,187
Progressive$3,935
State Farm$2,731
Travelers$3,729
USAA$2,489
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Remember, these rates are merely averages. Your rates will vary based on your driving record and location. Before you purchase auto insurance, shop around with at least three different companies to find the most affordable option for drivers with fully paid up insurance.

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Are there auto insurance discounts for fully paid up policies?

The good news is yes. Most companies offer auto insurance discounts for fully paid up policies.

On average, fully paid up auto insurance rates are discounted by 6%-12%, depending on where you have coverage.

Review the table below to determine which of the top auto insurance companies offers a fully paid up discount. The discount amount is listed if known.

Auto Insurance CompanyPaid-In-Full Discount AvailabilityPaid-In-Full Discount Amount
AllstateYes10%
American FamilyYesN/A
FarmersYes6%
GEICONoN/A
Liberty MutualYes12%
NationwideNoN/A
ProgressiveYes11%
State FarmNoN/A
TravelersYes9%
USAANoN/A
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Most insurance companies offer a discount. Some companies, including Liberty Mutual, still give a paid in full discount to drivers who pay their entire policy in two payments as well as just one. However, even if you don’t see a discount listed, don’t hesitate to inquire about paid in full discounts before you buy. 

For example, GEICO may not offer a fully paid up discount, but the company does charge an installment fee for monthly payments. Read our GEICO auto insurance review to learn more.

You may also find that smaller local companies offer this discount and better rates than these top companies. Don’t miss out on more affordable auto insurance by selecting the most popular insurer. 

Enter your ZIP code below to begin comparing auto insurance quotes from companies near you today. It’s the easiest way to guarantee that you aren’t overpaying for fully paid up auto insurance.

Frequently Asked Questions About Fully Paid Up Insurance

Scroll through these frequently asked questions to learn more about the fully paid up meaning for different insurance policies:

#1 – What are paid up additions?

Paid up additions refer to additional whole life insurance coverages that you add to an existing policy and pay for with the policy’s own dividends. However, the fully paid up meaning doesn’t change much when referring to life or auto insurance. Fully paid up still means that you paid all of your premiums in advance and are no longer responsible for making monthly payments.

However, unlike life insurance, auto insurance is renewed annually. You will have to pay your auto insurance in full every year to reap the benefits of a fully paid up policy.

#2 – If you own your car, does your insurance decrease?

Your auto insurance rates don’t automatically decrease after paying off your vehicle. However, you may be able to reduce your coverage once you pay off an auto loan. Less coverage results in more affordable auto insurance rates, but you’ll be paying more out of pocket after an accident.

Before you lessen your coverage, obtain new auto insurance quotes for your newly paid off vehicle — from at least three different companies — to determine if another insurer can offer you better rates.

#3 – If my car is paid off, how much insurance do I need?

If your car is paid off, you need to carry the minimum amount of liability insurance that your state requires. These levels vary depending on where you live, so research your state insurance laws before canceling any auto insurance coverage.

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