The Auto Insurance Exchange also known as the Auto Club or Triple A has a dirty little secret. While most insurance companies charge a flat service fee for each bill that is sent ($2.00, $5.00, $10.00, etc.) in their installment billing plans, Triple A charges a percent interest rate like a credit card (approx 18-22%). This means that you could be paying hundreds of dollars a year in interest.

For example let’s take a two car account with Mercury Insurance Company and Triple A. Let’s say that the six month premium with Mercury is $1,000 ($2,000 annually) and $2,000 annually with Triple A (they don’t sell six month policies). Furthermore let’s say that you select Mercury’s three pay option that has a $10.00 service charge per installment. There would be 6 installments in a year or 6 x $10 = $60 of service charges annually.

For a year, Triple A would ask you to put down 25% or $500.00. The remaining balance would be charged and interest rate say 18%. 18% of $1,500 would be $270.00. Subtract $60 (the amount of Mercury’s service charges) from the $270.00.You would pay an additional $210.00 with Triple A for the year. So in reality your auto policy would cost $2,210.00 a year.

Unfortunately, when most people purchase auto insurance they just want to know what the monthly amount is without adding in the service charges. If they did they might be shocked at what they were actually paying.


This article(s) represents the views and opinions of Garrett Parkinson and not the Insurance Companies that he represents or illustrates in his articles.