State Farm Insurance Payment Plan (SFPP) Review

Ever since we started cutting back our work hours in order to share childcare duties, Mrs. MMB and I have kept a closer eye on our monthly spending patterns. One of the headaches for budgeters is dealing with large lump-sum payments like those for home/car repairs, healthcare bills (human repairs), and home/car/life insurance. Our homeowner’s insurance is due annually (we don’t use mortgage escrow anymore), life insurance is due annually, and auto insurance is due semi-annually.

We use State Farm for all of these insurances due to our positive claim experiences in the past and their multi-line discount. When I asked about payment options, they told me about the State Farm Payment Plan (SFPP). I’m sure that most other major insurers have a similar program.


  • Steady monthly bill. With this plan, all your insurance bills get averaged into equal monthly, quarterly, or semi-annual payments. We chose monthly as that is how we visualize our spending.
  • Float. Let’s say your total bill is usually $1,200 once a year. If your policy is renewing today, then instead of paying $1,200 upfront now, with SFPP you pay $100 per month spaced out over the next 12 months. So you’re gaining some additional float time on your money. If you’re already paid up then you have to wait until renewal to start an SFPP.
  • Pay with credit card. You can use a credit to pay most bills already, but some auto-pay plans require a linked checking account. SFPP allows you to pay with a recurring charge on any Visa/Mastercard (no American Express). This is good news for those earning credit card rewards.
  • Chose payment due date. I don’t use this, but if you find it convenient you can select your specific payment due date each month (any day except 29th, 30th, or 31st).


  • Fees. At least in my area, SFPP costs $1 per month for a monthly payment plan. If your bill is large enough, then the free float that you’re getting may offset this $12 a year (even with today’s piddly interest rates, assuming you use a high-yield savings account). However, even without the float, a dollar a month may be worth it to you in exchange for simpler budgeting.
  • Must sign-up for automatic payments. This could be a pro for some people, but I know that others like to keep complete control when paying bills. If you wanted to cancel the auto-pay, it may not happen immediately and you may have to wait an extra month.
  • Possible confusion. When you cancel one policy and keep others, mixing all the payments together in this manner can make the refund math a bit confusing.

We signed up and look forward to the added simplicity.


  1. Bryce Shashinka says:

    My family has been using statefarm for the better part of a decade and have had the SFPP the entire time (exactly to avoid the high initial outlay) we also pay the extra dollar per month but its worth it to us for the ease of budgeting. (As you stated I also use a rewards credit card for the autopay and that easily offsets the extra cost)

  2. John Root says:

    Jonathan, why did you quit using your mortgage escrow for monthly payment on your home insurance in the first place? I chose escrow of insurance and taxes for the same monthly budgeting benefit you are getting with the SFPP plan. Granted, I can’t get credit card rewards and have to coordinate with the lender for changes, etc. Is there something else I’m missing?

  3. John Root says:

    Never mind. I just noticed that you paid off your mortgage recently. šŸ™‚

  4. I’m surprised you don’t escrow on your own for this type of large payment. You could still set aside the $100 a month into a savings account, pay the large bill when due on your credit card to reap the rewards. You avoid the fee, and you have your money until it is actually due.

  5. Cooper's Dad says:

    I too was a long-time SF customer (30+ years, since I got my driver’s license) for both auto and home. Didn’t use SFPP due to the fees, but here’s the REAL savings…when we got our first full-year premium for a new car (2012 Outback), I had sticker shock and started shopping. Fast-forward to now and I’m now with GEICO (auto) and their partner Liberty Mutual (homeowners for GEICO Customers east of the Mississippi) and have cut my ~$3,600 annual insurance premiums to a bit less than half that amount! I had great service from my SF agent over the years, and gave him a chance to justify the rate difference or talk me off the ledge, but he could not. (Notably, he was very helpful even on the way out, with confirming that I was signing up for equivalent coverages to what he had provided me.)
    In 8 months, I’ve been very happy with both new companies, including the process of obtaining online quotes and enrolling for coverage. Saving $1800 a year now means I don’t have to worry about the SFPP (though pay-by-the-month is standard with Liberty Mutual).
    I was very happy with State Farm, but couldn’t pass up that kind of savings.

  6. I also use State Farm but actually specifically don’t do the SFPP to maximize credit card bonuses from spending. I simply open new accounts which require spending for a reward when it is time to pay large annual bills (home insurance and auto insurance). This way it is easier to meet target spending, like $3000 in 3 month.

  7. Do you lose a “pay in full” discount when you participate in this plan?

  8. Shannon says:

    I agree with Cooper’s Dad. I was with Liberty Mutual for 10 years and assumed they were giving me a good deal. I finally took a look and realized that they increased my home and auto premiums every year (without any claims and with a depreciating car). I shopped around, and then called them to see if they could match the rates. They didn’t. So I went to a friend who is an insurance broker and he said that all companies will increase premiums year to year, and the only way to mitigate that is to shop around and switch companies every 3 years. I didn’t save as much as Cooper’s Dad – it was only about $600/yr, but I purchased better coverage.

  9. Bryce Shashinka says:

    I’m about to start shopping again. A short time after I got my license we switched to state farm and saved about half over Allstate but the premiums have crept back ip to where they were before the switch. At least in CT StateFarm has no ‘pay in full’ discount. (I actually just confirmed this with my agent in trying to get a true comparison of prices) I need to see if any of my corporate or professional association discounts are really worth it.

  10. I have my insurance with Amica and have been with them for years. They are always the top-rated insurance company in Consumer Reports magazine. I can attest to the great service, having had a few claims over the years. They offer a 10-month payment plan at no extra charge, and you can go online and pay by credit card before the auto-pay drafts on your checking account, if you like.

  11. Hmmm, I would think paying once a year with a 0% card would be more sensible than paying any fees.

    Also, who do you use for auto? We’ve yet to find anyone better in California than Wawanesa. Yes, they beat even USAA. 13 years with Wawanesa and I always price against others and the others always lose.

  12. I used to do set up so that I would pay monthly payments for almost all my car insurance, life insurance, etc. However, they would charge monthly fee’s for being able to pay monthly. Since moving to budgeting with YNAB, I now budget all of theses things within the program. I have also added all bills that I pay yearly including HOA, property taxes, membership fees, etc. I budget the amount I need for each yearly payment per a month within the program. So instead of paying out to the companies per a month with a fee, I earn interest on the money until it is paid out. For example:

    HOA: $600/year
    Property tax: $5000/year
    Car Insurance: $600/year
    Life Insurance: $800/year
    Costco Membership: $110/year
    AAA Membership: $92/year

    So the breakdown monthly payments I put away are: $600/month with no fee’s. In addition, this money sits in a high interest savings account (0.85% high interest bah!) until it is used.

    I know that you use However, I find that YNAB is more of a philosophy of budgeting vs. tracking what I’ve already spent. I find that YNAB allows for finer control of spending and encourages savings for those yearly costs so that you don’t get hit with those large expected payments throughout the year.

    As you can tell, I’m a huge fan of YNAB for exactly the reason you wrote this post about, lump-sum payments. They are actually having a sale until Monday and you can get it for 43% off if you use this link:

  13. Heather says:

    Like others have mentioned, my insurance rates have crept up over the years. There’s nothing like getting a new bill and seeing another 10% increase to really get me going! (Can you tell my insurance is due this month?) Jonathan, I’d be interested to know what’s “normal” for homeowner’s insurance inflation — i.e. what’s a normal amount %wise to expect it to rise per year, and when should we start shopping around? I know all companies do it, and I don’t want to go through all the hassle to switch just to be back at the exact same rate I’m at now in another 6 months.

  14. Tommy Z says:

    Would be an alternative to the $1/month fee using State Farm’s monthly bill program?

  15. using capitalone 360 to put money monthly as a sinking funds. Lets you create separate accounts for everything to keep track. I have been doing this for 7 yr when it used to be INGDirect. shop for car and home insurance every yr to compare rates

  16. All this talk about savings has made me want to shop around again for insurance! Last time I did it State Farm actually did okay but it definitely varies widely from person to person. Many car insurers focus on one segment (multiple tickets, younger drivers) and offer the best rates for that niche.

    You can use a savings account to prepare for a lump-sum payment, but you’d have to do the monthly payments ahead of time to have enough money on the due date. In contrast, the payment plan are essentially a cheap financing plan that lets you shift the monthly payments to after the normal due date.

  17. Shine..down says:

    I use USAA and do the exact same “budget billing”, and have for about 8 years. It works slick; I get points on my credit card, and they are guaranteed their premiums on time. We use it for home, auto, term life, valuable pers property – and there is No charge for this service!

    If you are ex-service member like me (or current), check it out – USAA has always been great with claims (we’ve had one house, and a few auto ones that weren’t our fault) over the past 8 years, and they are fantastic. I think we pay just a hair more for the auto policy, given a comparison I did with my builder’s broker when we built a house a few years ago, but to me it’s worth it, b/c I feel I can always trust this company. We may re-evaluate down the road.

  18. I did the same as well – Had State Farm and switched to Geico and saved about 50% what I was paying to State Farm. Equals about $600/year in savings since I’m driving a pretty expensive vehicle… was happy and never had problems with State Farm, but again… they couldn’t match the quote which was too significant.

  19. Bryce Shashinka says:

    Inspired by Cooper’s Dad I started quoting. I have an auto quote now that more than cuts in half the premium for better coverage (limits are the same but it covers a rental car if mine is not usable) from American Commerce. I’m waiting for the agent to get back to me with an updated quote that includes all our policys. But I expect that the bill will be enough less that I can put another 4k/year tward the mortgage.

  20. Brenda Kidd says:

    If State Farm Insurance Adjusters have Denied Or Prolong Your Claim Or Dropped You Please Sign The Petition Against State Farm…

  21. We’re also long-term State Farm customers and I re-shopped our auto policies a few years back. I don’t recall the details other than: (1) State Farm came out looking pretty good after factoring in the various discounts, and (2) Geico was way, way, way more expensive. I was surprised.

  22. I don’t get it. Why not just open an account at whatever bank you bank at, name it “Insurance and Tax Escrow” or something similar, and make regular monthly transfers to it. You could even earn a little interest rather than pay someone $12 to do that for you.

  23. @Robert – The main difference is that this is essentially a payment plan that defers the lump sum due. Your way you’d have to make double monthly payments the first year to save up enough to make the lump-sum payment upfront.

  24. This is a great blog post about a good idea. Thanks.

  25. State Farm will calculate the entire premium due and simply divide it up into equal monthly installments. Quite a few companies will finance the premium if you pay monthly – so paying everything up front doesn’t really save you anything, but you pay extra if you pay monthly.

    Please keep in mind that different states have different laws and different loss factors (think homeowner risk for south Louisiana or south Florida vs. Montana or Iowa). Also, “Company A” rates may be totally different within the same state.

    Sometimes GEICO is cheaper. Sometimes State Farm has lower premium. There are over 1,600 different factors that go into rating your insurance. Every person has a different insurance score, and every company uses different factors (i.e. your credit score greatly impacts your insurance premiums).

  26. I got fed up with State Farm due to their annoying SFPP plan. Every single month the payment amount was different – often significantly.
    Whats the point of having an auto insurance policy if they are always changing the price on you? And what’s the point of a monthly plan when you can’t even count on a steady payment amount??
    I washed my hands of them and went to Allstate and did pay-in-full. So far so good.

    • miss vee says:

      That was the same reason I let State Farm because it kept going up and changing which is not good if you are on a fix income.

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