Most people budget according to their salaries and it can be confusing to get a quote for semiyearly coverage. A much smaller figure may make it easier to sell, instead of scaring people with a whopping full figure. However, that isn’t why most underwriters only sell 6-month vehicle insurance policies. This post answers questions as follows; why most of them choose the shorter time scale and would longer one be better for you? Also both terms are compared from both providers and consumers view points.
It may seem like a favor to policyholders, as it is easier to pay premiums on semi-yearly basis. However, the real reason is that they want to leave their options open. You would think that they would want to tie you down for a lengthier contract to make sure they keep the business. But it appears that underwriters aren’t that keen on tying themselves down longer than this period.
You need to remember that they are 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 the vehicle (with full coverage). In other words, you transfer certain risks to them for a price.
This concept is mainly there to allow them to re-examine prices. Otherwise, most of them 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 contract with a refused renewal.
Is 6-Month Car Insurance Better for You?
There are so many variables in determining rates that not expecting any change is a bit naïve. People, providers, market, costs, laws and even the weather conditions change. When this is the case, it is logical that most underwriters prefer to carry out risk analysis twice now so that they can calculate it much more accurately. If they are successful in this endeavor, good drivers should get cheaper rates while bad ones 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 any longer. 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 can be highly beneficial. Maybe you haven’t had time to shop around the earlier and bought it 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 costs.
Usually, people’s lives improve as they age. They progress in jobs, get married, buy home, 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 soon that can increase the cost. On the other hand, past accidents and tickets may come off the record that qualifies you for the best discounts. The truth is it can work both ways and the idea behind it is that they are regularly adjusted to reflect the real risk.
The renewal premium can go down or up. Also, you are free to switch 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 competition in your area you may be able to get longer terms. As discussed above, most of them would be for half the duration in the US.
These companies are known to offer annual car insurance policies.
- Liberty Mutual
- The Hartford
- National General
- The General
Nonetheless, it is worth noting that they may not offer them in every region and to every applicant. They may have qualifying conditions before they can offer you this option. You may be able to get quotes from some of these companies through our platform. Enter your zip code above and see.
6 vs. 12 Month Car Insurance Policies
Short and sweet may be fast becoming the norm. Why not read the comparison between semi and annual 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 circumstances like dropping credit score due to financial problems you may want to lock in current low rates by buying coverage for a longer period.
- Prices can increase as a result of factors that aren’t in your control. Buying a lengthier plan would make sure such increases wouldn’t apply to you until the renewal date.
- It is difficult to say that this would work out better. However, they protect you against premium increase due to accidents or traffic tickets.
- It may be easier to buy it once and forget about it from the administration point of view. The renewal date would come like a birthday that it is more memorable.
Advantages of 6-Month Automobile Insurance Plans
First of all, you don’t have to go looking for quotes since most of them are for this duration already. Here are some of the obvious advantages of shorter-term for policyholders.
- In general, circumstances should improve with age. You move into nicer zip code, buy home, a safer car, and have great credit score in time that work in your favor to reduce costs. Providing life moves in the right direction you should see the premium keep dropping and therefore you would want them briefer.
- With a shorter period, you benefit from positive changes in a driving record earlier, like traffic tickets coming off it.
- It is easier to pay and this may allow you to pay full amount at once and avoid instalment fees or even get a further discount for doing so.
- Also, it gives twice more chance to find cheaper coverage and move away from expensive ones. 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 one at the end and lower the expenditure.
All being equal, if you are a good driver and getting pretty cheap rates you should lock the savings with yearly car insurance. And if the premium is currently high due to bad history and recent claims you should buy a six-month coverage, especially when you are expecting the driving record to become clean or credit score improve soon.
However, you have a better chance of getting cheap quotes because nearly every company offers them while only few offer for the full calendar. Higher numbers of providers usually mean higher competition. When the majority of insurers choose quoting for a shorter term you may need to follow the flow if you want the best deals.
With semi-annual intervals, motorists have two distinct plays at renewal. If their premiums went down they benefit from it even if they don’t shop around. If it went up for no reason they can look for alternative carriers and switch if it is necessary. So, it allows you to look into things more often and it may mean more saving opportunities.