Insurance agencies use premium installment charges to cover administrative costs associated with more frequent payment processing. Installment payments are another consideration when choosing an auto insurance payment plan. Credit card companies and financial institutions often charge a fee for processing payments, and many insurance companies recover it by adding an installment fee to your monthly bill. These installment fees are generally small, but they are not regulated either.
An insurance company can set their own fee amount, even if the installment fee is higher than what they are being charged to process their payment. Car insurance quotes from reputable companies and comparison sites should always be free; it's likely that anyone who charges you is just stealing your money. Insurers charge more during the first month so that customers can be insured immediately, even before the underwriting process ends. Bankrate has broken down the pros and cons of dividing your car insurance premium into monthly installments so you can decide which payment plan option is best for you.
Statistically, teens are more likely to cause car accidents than the average driver, so insurance companies charge them the highest premiums.