Is a 6-Month or 12-Month Auto Insurance Policy Better?

Along with many other preferences and choices, motorists can choose between two policy durations of 6 and 12 month. Some companies offer both choices while others stick with one of the options. Depending on what you think will happen in the next year to automobile insurance prices, your driving record and credit score you may be inclined to go for one of them, if you were given the choice.

There are more choices of carriers with a semi-annual term as many major auto insurers offer 6-month vehicle insurance policies only. So, you may have to look at regional and smaller insurers to find an annual coverage in some states. And the companies offering both durations may offer 6-month policies only to people with poor driving history or bad credit score.

6- Month versus 12-Month Car Insurance Policies

Both options offer some advantages and disadvantages. So, it mainly depends on how you view the likelihood of events happening or possibility of taking certain actions and if you want to align yourself for certain options. Here are the main considerations when you are making a choice.

Desire to lock in a great deal may make buying a yearly renewing auto insurance policy a better choice. This way, they would be able to keep the rates for a year even if they have a claim two months into their annual term.

Paying the premium in full can offer motorists as much as 9% savings. It is easier to pay the premium for a 6-month policy in full and get this discount. It doesn’t matter if you have to spread the premium anyway. Then, you may have to look at advance purchase or EFT saving.

Switching is easier with a 6-month car insurance policy as well since you will have one more renewal period in a year. Although most companies don’t charge for policy cancellations, most people usually consider switching at renewal.

Possible rate hikes are more likely to catch you when you have a semi-annual policy since your auto insurance company would apply their new prices if they change it within this period. You are safer from any price increase for a year with an annual policy.

Young and high-risk drivers may prefer a 6-month policy if they are expecting their driving records will improve, a ticket will come off record or an accident will stop affecting rates. Even having a birthday in the next six months could affect the renewal rates for a teenage driver. But if they are worried that things may go the opposite direction, they may want to look at a 12-month car insurance policy when they can.

Wanting to return to mainstream insurers quicker can be a good reason to pick a 6-month policy. This is a strategy often engineered by independent brokers after an at-fault accident or when they are dealing with a driver who can only find coverage from non-standard insurers. They take the shorter term and hope to switch to standard insurers shortly.

Less administration with a 12-month policy since you don’t have to keep renewing policies. You can set it up and forget about it. You know exactly which month of the year your policy expires, rather than remembering two dates. Also, you may not need to keep sending school reports and other proofs twice a year to qualify for discounts.

One off discounts would have a bigger effect on 12-month vehicle insurance policies. For example, if you are getting a 6% discount for switching to your new carrier it results in a larger dollar savings with the longer option.

Expecting a worsening credit score may encourage motorists to lock in a 12-month policy. Many people may not realize but premiums can be as much as 52% different on average between a great credit score and a poor one.

A 12-month policy is likely to save more money because it can avoid price increases and make the most of good deals. On the other hand, many companies offer only a 6-month auto insurance policy and this alone increases your chances of finding a better deal. So, being flexible may serve you better. Then, you don’t lose on a good deal just because the provider isn’t offering a 12-month policy and you insist on it.