Every premium finance agreement splits your premium into two parts: a down payment you pay at the start, and an amount financed you repay in monthly installments.

Why there is a down payment

Many commercial policies — trucking policies especially — have a minimum earned premium: a portion the insurance company keeps even if the policy is cancelled early. Some policies also carry fees that are never refunded. The down payment generally covers those amounts, because they cannot serve as collateral for the loan. The rest of the premium, which the insurance company would return if the policy were cancelled, is what secures your financed balance.

That is also why the down payment is not refunded if a policy is cancelled: it paid for the part of the premium the insurance company has already earned.

How the down payment is set

It depends on the policy — the insurance company's minimum earned premium, any non-refundable fees, and the length of the term. Your agent will show the exact figure on your agreement before you sign. A larger down payment means a smaller amount financed, so smaller monthly payments and a lower total finance charge.

How monthly payments are figured

  • Amount financed = total premium (plus any financed fees) minus the down payment.
  • A finance charge is added for the cost of the loan.
  • The total is divided into the number of monthly payments on your agreement, each with a set due date.

Your agreement lists all of these figures — the amount financed, the finance charge, the total of payments and each payment's amount .

Paying off early

You can pay your balance off at any time. When you do, you receive a refund of the unearned part of the finance charge, as Texas law provides. (More in what premium financing costs.)

Try the numbers

Our estimate tool shows the down payment, monthly installment and finance charge for a premium amount, and lets you send the estimate to your agent.

Talk to us

Ask your insurance agent to finance your premium with National Premium Finance Company, or get an estimate first. Questions? Call (214) 586-3155 or contact us. Hablamos español.