Most people budget monthly or yearly and it can be confusing to get a quote for semiannual coverage. A much smaller figure may make it easier to sell the policy, instead of scaring people with a whopping 1 year quote. However, that isn’t why most insurers only sell 6 month auto insurance policies. This post answers questions a long the lines of why most carriers choose the shorter term and would longer cover be better for you? Also 6 and 12 month terms are compared from both insurers and policyholders view point.
Why Do Many Companies Sell Only 6 Month Car Insurance?
It may seem like a favor to policyholders, as it is easier to pay premiums on semi-annual basis. However, the real reason is that insurers want to leave their options open. You would think that they would want to tie you down for a longer contract to make sure they keep the business. But it appears that insurers aren’t that keen on tying themselves down for more than 6 months at a time.
You need to remember that your insurer is on the hook to pay for injuries and damages you cause to third parties as well as collision, storm, flood, vandalism and theft losses occurred to your vehicle (with full coverage). In other words, you transfer certain risks to your insurer in return for the premium payment.
The concept of 6 month auto insurance coverage is mainly there to protect insurers and allow them to re-examine premiums. Otherwise, most insurers would make it optional to choose either of these two terms. If they end up misjudging the risks involved in insuring you they want to be able to increase the premium accordingly or get out of the policy contract with a refused car insurance renewal.
Is a 6 Month Vehicle Insurance Policy Better for You?
There are so many variables in determining premiums that not expecting any change for 12 months is a bit naïve. People, companies, market, costs, laws and even the weather conditions change. When this is the case, it is logical that most car insurers prefer to carry out risk analysis twice a year so that they can calculate premiums much more accurately. If they are successful in this endeavor good drivers should get cheaper premiums while bad drivers are sufficiently penalized for reckless driving.
Most auto insurers only sell 6 month policies because a lot changes even in such a short period and therefore they don’t want to be tied down by insuring you for 1 year. There is a lesson to learn from this and that is to shop for cheaper rates at each renewal without fail as things change.
The good thing for you is that this semi-annual nature of policies can be highly beneficial. Maybe you haven’t had time to shop around the last time and bought a policy in a hurry. And you are not the type of a person to break a contract. So, in six months time you can shop for the best deals and reduce your premium.
Usually, people’s life improve every year as they progress in their job, get married, buy home, purchase a safer car, improve credit score and so on. All of these are the factors that affect rates in a good way.
On the one hand, you may have a traffic ticket or an accident shortly that can increase your premium. On the other hand, your past accidents and tickets may come off your record that qualifies you for the best discounts. The truth is it can work both ways and the idea behind a 6 monthly premiums is that they are regularly adjusted to reflect the real risk.
Your renewal premium can go down or up. Also, you are free to switch automobile insurers if you are not happy with the current service or renewal quote.
Can You Buy a 1 Year Automobile Insurance Policy?
Depending on where you live and the insurers in your area you may be able to get 12 month auto insurance quotes. As discussed above, most carriers in the US would offer only semiannual policies.
These companies are known to offer yearly car insurance policies.
- Liberty Mutual
- The Hartford
- Erie Insurance
- National General Insurance
- The General
- Safeco Insurance
- Allied Insurance
Nonetheless, it is worth noting that they may not offer quotes for an annual coverage in every region and to every applicant. They may have qualifying conditions before they can offer you the option of buying a yearly policy. You may be able to get quotes from some of these companies through our quote platform. Enter your zip code above and see.
6 Month vs 12 Month Car Insurance Policies
Annual policies may be fast disappearing but you can still find them if that is what you prefer. Why not read the comparison between yearly and six-monthly coverage below before making your mind up? Both terms may have advantages and disadvantages.
Benefits of a Yearly Auto Insurance Policy
- If you are expecting negative changes in your circumstances like dropping credit score due to financial problems you may want to lock in your current low rates by buying coverage for a longer term.
- Rates can increase as a result of factors that aren’t in your control. Buying a longer-term policy would make sure such increases wouldn’t apply to you until your renewal date.
- It is difficult to say if a yearly automobile insurance coverage would work out better. However, these policies protect you against premium increase due to accidents or traffic tickets.
- It may be easier to buy a one year policy and forget about it from the administration point of view.
Advantages of 6 Month Car Insurance Plans
First of all, you don’t have to go looking for quotes like you do with yearly quotes since most of the them are for 6 months already. Here are some of the obvious advantages of shorter-term policies for policyholders.
- In general, your circumstances should improve as the years go by. You move into nicer zip code, buy your home, buy a safer car, and have great credit score in time that work in your favor to reduce your rates. Providing your life moves in the right direction you should see your premium keep dropping and therefore you would want a semi-annual coverage instead of an annual policy.
- With a 6 month coverage, you benefit from positive changes in your driving record earlier, like traffic tickets coming off your record.
- It is easier to pay semi annually than annually and this may allow you to pay full premium at once and avoid instalment fees or even get further discount for full payment with some insurers.
- Also, it gives twice more chance to find cheaper policies and move away from less than satisfactory insurers. For example, you might have had to go with a nonstandard carrier last time due to recent traffic tickets or accidents. You can try to move to a standard insurer after 6 months and lower your premium.
All being equal, if you are a good driver and getting pretty cheap rates you should lock the savings with a yearly vehicle insurance policy. And if your premium is currently high due to bad driving history and recent claims you should buy a six month auto insurance policy, especially when you are expecting your driving record to become clean or credit score improve shortly.
However, you have a better chance of getting cheap 6 month quotes in comparison to getting cheap 12 month auto insurance quotes because nearly every company offers the former while only few companies offer the latter. Higher numbers of providers usually mean higher competition. When the majority of insurers choose to offer quotes for shorter term you may need to follow the flow if you want the best deals.
With semiannual policies policyholders have two distinct plays at renewal. If their premiums go down they benefit from it even if they don’t shop around. If car insurance went up for no reason they can look for cheaper semi-annual auto insurance quotes from alternative carriers and switch if it is necessary.