6-Month vs. 12-Month Car Insurance Policies

Car insurance is essential for every driver to have. When shopping for the right coverage, you may come across the option of a six-month or 12-month policy. Below, we’ll go over some information about both choices and which may be better for you.

Many car insurance providers offer 6-month policies by default. Six-month policies are more common than annual policies because they enable insurers to recalculate rates more often.

Insurance companies are in the business of gauging risk. They assess every potential policyholder in-depth before offering coverage, and they reevaluate all existing policyholders at the end of their term to ensure that it’s still a wise financial decision to keep covering that person.

Auto insurers typically offer six-month policies so they have opportunities to recalculate your rates mid-year. A lot can happen in six months of driving a car, and your insurance company wants the ability to examine those potential changes and reflect them in your premium. This isn’t necessarily a bad thing. Six-month car insurance can go up or down depending on your driving behavior, claims record, and more during the policy period.

Most policy premiums won’t change much, if at all, after six months if you don’t make any changes to your coverage. But, if you were to cause an accident, add a driver to your policy, change addresses, or get a new car, you might see a change in your premiums. Your actions can change your risk profile, and your insurance company can reflect your new risk more immediately with a six-month policy.

Your rates may also decrease after six months if you have penalty points, tickets, or accidents that fall off your driving record. You may also qualify for claims-free or other discounts more immediately with a six-month car insurance policy. 

A 6-month premium is the amount you owe your car insurance for six months of coverage. You can usually pay your car insurance monthly or every six months, but some insurers may offer a small discount for paying your premium in full.

Even though your coverage may be for six months at a time, you can likely split your premium payments into monthly installments. For instance, let’s say your six-month premium was $1,200. Instead of having the total premium due at the start or renewal of your plan, your insurer will likely give you the option to pay $200 per month for the six months.

Your coverage and deductibles should all stay the same whether you pay monthly or not. Some providers offer paid-in-full discounts to policyholders who pay their whole six-month premium at once. The discount is usually between 5% and 10%, but it will vary by company. Insurers understand that most people don’t have the cash on hand to pay their premiums in full, so it’s usually not an issue to pay monthly.

Other than the length of time and how often your rate changes, the differences between six-month and 12-month car insurance policies are minimal. Both should offer you the coverage you desire. You also always have the ability to make changes and cancel your policy during the coverage term.

There aren’t really any clear advantages or disadvantages of a six-month vs. 12-month car insurance plan. Insurers consider six-month policies more flexible since they can recalculate your rates more often. This may not affect you unless you change coverage, get into an accident, or add cars and drivers to your plan. 

As we mentioned earlier, more frequent recalculations of rates can help or hurt you. If you’re concerned about a rate increase, you may want to opt for a 12-month policy to lock in a certain rate for longer.

You could say that you have a greater chance of potentially forgetting your renewal dates with a six-month policy since renewals would occur twice as often as with annual plans. But, many people enroll in auto-pay. If not, you should see the communications with your provider through mail or email before your coverage does lapse. 

While the chances are minimal, you don’t want to risk a coverage lapse, especially on a financed car. Driving without insurance is illegal and may result in fines and license suspension. With a financed car, your leasing company could repossess the car in a worst-case scenario.

You can switch auto insurance providers just as easily with a six-month or 12-month policy. You can always cancel your policy. More frequent renewal dates may make it more straightforward to switch, but you’d still need to line your new plan up to activate before your current plan ends. This will need to be done no matter when your coverage expires. 

Avoiding a potential cancellation fee with a six-month policy may be easier since it’s up for renewal more often, but many carriers don’t have cancellation fees. Double-check if this is something you’re concerned about.

Younger drivers pay more for insurance, and you may be able to save more immediately with a six-month policy that can factor in your birthday more quickly. But, this may only matter for a few birthdays, and you shouldn’t change auto providers too frequently. Changing car insurance companies too often may raise some red flags, plus it would prevent you from racking up claims-free or loyalty discounts.

Many, but not all, major insurance companies offer 12-month car insurance policies. The Hartford, Liberty Mutual, The General, MetLife, Infinity, Erie, and Allstate are among those that offer 12-month auto policies. In addition, specialty, local, or regional insurers may also have 12-month options.

To find out which companies offer 12-month car insurance policies, you should call the provider directly. Some companies may only have annual policies for certain customers, like those with exceptionally high premiums. 

Looking specifically for a 12-month policy may not benefit you, especially if you’d have to surpass cheaper or better coverage just because it’s only offered in six-month durations. 

Whether a six-month or 12-month auto insurance policy is better for you depends on your financial situation and driving record. But, for most people, a six-month policy should suffice.  For instance, bad drivers may want a shorter policy term so a ticket or accident can fall off during the year.

So many factors affect car insurance premiums, and the length of the policy isn’t one of the important ones. Your location, age, driving record, and credit history all affect your rate. The age, make, and model of your car are crucial, too. Your provider will take these factors and more into account whether you’ve got a six-month or 12-month plan. 

The best car insurance is very subjective since every person is so different. A 12-month policy may be preferable to someone who wants to lock in their favorable rate for longer. A six-month policy may be better for you because your agent found you a great policy at that length. Maybe some provider doesn’t offer the endorsement you want, so you turn to another company that only offers 12-month plans.

The best way to find the right coverage is to shop around. At Clovered, we try to make this easy. You can get in touch with our team of licensed agents online through our auto insurance quote form. After submitting your information, they can get back to you with your auto insurance options.

You can also call our agents during business hours at 833-255-4117, or you can email us at [email protected]. If you’re still unsure about a six-month or a 12-month car insurance policy, let us help.