Should you buy a six- or 12-month auto insurance policy?
Car insurance policies usually come in two durations: six months and 12 months. Six-month policies are more common than annual insurance policies, as they allow insurance companies to easily recalculate rates, factoring in routine price revisions and changes to your driving profile.
Let’s assess the differences between six- and 12-month car insurance policies.
A six-month car insurance policy comes with two primary upsides:
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 reasons your auto insurance rates might be revised downward:
Although you are not locked into your car insurance policy, a shorter policy period 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 simply non-renew at the end of your six-month term.
The primary benefit conferred by 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 one 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, the insurance company may raise rates going forward.
Auto insurance premiums typically get more expensive as the years go by. Although you will most likely experience a rate revision when your policy renews each year, you can avoid a twice-annual revision by purchasing a longer 12-month policy.
Many popular insurance companies don’t offer annual policies. Our experts gathered rates — via a methodology outlined here — to compare average six- and 12-month rates for a typical driver. Remember: your rates may vary, depending on your driving history. Compare personalized rates today to find a policy that fits your profile.
If you’re looking for more information on car insurance or ways to save, see our additional resources below: