6-Month vs. Annual Car Insurance: Which is Better?

Should you buy a six- or 12-month auto insurance policy?

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Should you buy a 12-month car insurance policy?

Car insurance policies usually come in two durations: six months and 12 months. Six-month policies are more common than annual insurance terms, as they allow insurers to easily recalculate your rate, factoring in rate revisions and driving profile changes. Let’s look at the differences between six- and 12-month car insurance policies.

Which insurance policy duration is best for you?
  1. When is a six-month car insurance policy better?
  2. When should you opt for an annual policy?
  3. Cost comparison
  4. Additional resources

Benefits of six-month auto insurance policies

A six-month car insurance policy comes with two primary benefits: rates are recalculated more often, and you are allowed more flexibility.

Frequent recalculation of insurance premiums

Depending on your driving record, more frequent premium reviews can save you money. Most at-fault accidents remain on your insurance record for three to five years. If a violation is set to fall off your record midway through your policy, most insurance companies will not adjust your premium until the policy period ends or you specifically ask. A shorter policy duration allows penalties to “fall off” your record more quickly.

Other ways you can save money via rate revision:

  • Birthday
  • Improved credit score
  • Expiration of moving violations
  • Paid-off loan

More flexibility with your auto insurance policy

Although you are not locked into your car insurance policy like a contract, a shorter policy period still provides more flexibility than does an annual policy. If you’re unhappy with your current insurance provider but want to avoid cancellation fees or a lapse in coverage, you can non-renew at the end of your term.

Benefits of an annual auto insurance policy

The biggest benefit of a 12-month car insurance policy is the lack of surprises (excluding any changes you make to your policy). If you add or remove a vehicle or driver, your premium will change, but otherwise you will be immune to rate revision for at least a year.

A rate revision is a standard procedure for car insurance companies at the end of a policy period. Insurers compare the previous year's claim payouts to their revenue and adjust prices accordingly. If the previous time period resulted in a deficit, they may raise rates going forward.

The general trend is for auto insurance premiums to get more expensive. Between 2011 and 2017, the cost of car insurance in the US has increased by 13%. Although you will most likely experience a rate revision when your policy renews each year, you can avoid a biannual revision by purchasing a 12-month policy.

Annual car insurance policies are difficult to find. Most of the time, you will need to turn to a regional or local provider.

Which Costs Less: 6-Month Car Insurance or a 12-Month Policy?

Many popular insurance companies don’t actually offer annual policies. Moreover, how much you pay for car insurance depends on you. We pulled rates using a methodology outlined here to compare average six- and 12-month rates for a typical driver.

InsurerAverage 6-Month Premium
Liberty Mutual$751
State Farm$884


InsurerAverage Annual Premium
The General$3,739
Kemper Specialty$3,395

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Additional resources

If you’re looking for more information on car insurance or ways to save, see our additional resources below:

What is covered by a bodily injury liability coverage?
Cheapest six-month insurance policies
How to find an annual insurance plan
Roadside assistance vs AAA
Accident forgiveness comparison
What is covered by homeowners insurance?
Ava Lynch LinkedIn

Based in Austin, TX, Ava has been in the insurance industry as a licensed agent for 4-plus years. Ava is currently one of The Zebra’s resident property insurance experts and has been featured in publications such as US News Report, GasBuddy, and Yahoo! Finance.