6-month vs. 12-month auto insurance: Which is better?

Q: Does car insurance go down after six months?

If you have a 6-month car insurance policy, it may go down , but it could also go up. Your policy may be reviewed after six months and your insurance carrier will determine your new rates. Your rates will likely increase if you’ve had any speeding tickets or accidents or moved to a new area with a higher claims history. Conversely, if you’ve had a moving violation ready to drop off soon, you won’t have to wait the full 12 months and can look forward to a better rate upon the 6-month policy review.

6-month vs. 12-month auto insurance

The only difference between a six-month and a 12-month car insurance policy is the term length.

“In other words, the six-month policy is reviewed twice a year, while the 12-month policy is reviewed annually,” McChristian says. “At the end of the policy, the insurer will look at the factors affecting the cost of insurance and determine if the insurance premiumThe payment required for an insurance policy to remain in force. Auto insurance premiums are quoted for either 6-month or annual policy periods. you pay must be adjusted.”

Most car insurance companies today only offer six-month terms. Longer, annual terms were once more common, but today it’s hard to find one. 12-month policies lock in your rate for an entire year, which is appealing because your rates can’t go up. Another benefit is that any car insurance discounts you qualify for will apply for the entire year.

What is a 6-month car insurance policy?

A 6-month car insurance policy is a standard insurance policy in terms of coverage and has a six-month term for that coverage. For the 6 month period, your rate is locked in. After six months your insurance carrierAn insurance carrier is the company that provides your car insurance policy and pays claims. may change your rates. Any changes to your driving record or personal situation can trigger a change in the cost of your policy.

You have the option of renewing or canceling. Your insurance company can also nonrenew your policy at the six-month mark if there are valid reasons.

What is a 12-month car insurance policy?

A 12-month car insurance policy offers the same types of car insurance coverage, according to McChristian. It’s just the length of time that you’re locked into your rate, and when your carrier can do a policy review. At that time, your rates can change, for better or worse, depending on your situation.

If you’ve had an address change, a change to your driving record (speeding tickets or accidents), or made another change, such as adding a new driver to your policy, your rates will change as well.

Remember, sometimes your rates go up regardless of anything you have done (or not done). Insurance carriers often raise their rates across the board because of external factors.

Is 12-month car insurance cheaper than 6-month car insurance?

Both types of policies are similar when it comes to price, with a few differences.

“Typically, a driver may find a lower price with the 12-month policy because it locks in the rate for a year,” McChristian says. This is in contrast to a 6-month policy, which will be reviewed after the six months is up. Your rates could go down or up.

Regardless of the term length, you may be able to get a discount if you pay your premium in full up front. With a 12-month policy, you’ll only have to pay once a year.

There are a few instances where a 6-month policy may be the cheaper option. For example, young drivers are the riskiest to insure, but rates start to drop around age 19-20. If you’re going to hit a birthday during your policy term you may consider a 6-month policy so you’re not locked into the teen driver rate for an entire year.

How to choose the right auto insurance policy term length

One benefit of a 12-month car insurance policy is that you don’t have to go through a policy review as often. This means you don’t have to qualify for discounts again, and any rate increases due to speeding tickets or accidents will hold off until the 12-month mark. With a 6-month policy, you may have a review and possible rate hike twice a year.

Some people also like having an annual payment they can factor into their budget, which you get with a 12-month policy.

“That being said, an auto insurance shopper might find it challenging to find a 12-month policy. Most are six-month policies,” McChristian says.

If you can find a 12-month policy, it’s a good way to prevent more frequent rate increases.

FAQ

Does car insurance go down after six months?

If you have a 6-month car insurance policy, it may go down, but it could also go up. Your policy may be reviewed after six months and your insurance carrier will determine your new rates. Your rates will likely increase if you’ve had any speeding tickets or accidents or moved to a new area with a higher claims history. Conversely, if you’ve had a moving violation ready to drop off soon, you won’t have to wait the full 12 months and can look forward to a better rate upon the 6-month policy review.

Is it better to pay car insurance monthly or every six months?

If you pay every six months, you may earn a paid-in-full discount. However, for many people, monthly payments fit better into the budget. It depends on your finances and how you prefer to handle bills.