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As you shop for car insurance, you may have the option to choose a policy that lasts for six months or one that lasts for 12 months. Which is better? A six-month car insurance policy is generally best if you prefer more flexibility, while a 12-month policy is best if you want to lock in insurance rates for a longer period. Here's what you need to know to make a smart decision.
| 6-Month vs. 12-Month Car Insurance Terms | |
|---|---|
| 6-Month Car Insurance | 12-Month Car Insurance |
| Policy lasts 6 months | Policy lasts 12 months |
| Your rates may change after 6 months | Your rates may change after 12 months |
| Paying premiums in full costs less | Paying premiums in full costs more |
| Widely available | Not as widely available |
What Is a 6-Month Car Insurance Policy?
A six-month car insurance policy lasts for six months before you need to renew it. As the end of your policy term approaches, the insurance company reviews factors such as your driving record, mileage and more, and may adjust your premiums higher or lower for the coming term. You'll typically receive a notice of any rate changes prior to your renewal date.
Six-month car insurance policies have their pros and cons.
Pros
- Potential for faster rate reductions: If an accident, moving violation or DUI drops off your record, your premiums will generally go down at your next insurance renewal. A six-month car insurance policy means you'll see this rate reduction sooner than you would with a 12-month policy.
- More flexibility: You can cancel your car insurance at any time, and if you paid your premiums upfront, you'll generally receive a refund for the unused months of coverage. However, some insurance companies charge an early cancellation fee. In this case, a six-month policy offers the flexibility to switch carriers sooner without worrying about fees.
- More affordable upfront payment: Insurance companies may offer a discount if you pay your full premium upfront. Paying for six months of coverage at once costs less than paying for a full year, which can be easier on your budget in the short run.
Cons
- Less protection against rate increases: Your insurance premiums are locked in for a shorter period than with a 12-month policy. Filing a car insurance claim or having negative marks on your driving record, such as an accident or DUI, may cause an increase in your premiums. If one of these incidents occurs, it will affect your car insurance rates sooner with a six-month policy than with a 12-month policy.
- Can be harder to keep track of: If you don't auto-renew your policy, you'll have to remember to renew it every six months. This could be easier to forget than an annual renewal, potentially causing you to lose coverage.
What Is a 12-Month Car Insurance Policy?
A 12-month car insurance policy lasts one year. Unless you make changes to your coverage, such as adding a new car, changing your deductible or adding a driver, your premiums are typically locked in for 12 months.
Like with a six-month policy, there are benefits and downsides to a 12-month car insurance policy.
Pros
- Lock in rates for longer: Car insurance premiums can rise due to factors outside your control, such as inflation and rising costs for car repairs. A 12-month car insurance policy protects you against price increases longer than a six-month policy does.
- Can be easier to manage: If you don't auto-pay or auto-renew your car insurance, an annual renewal can be easier to keep track of than renewals that occur every six months. Annual renewals can make it less likely that you'll miss a premium payment, which could cause your coverage to lapse and put you at risk.
Cons
- Less flexibility in canceling: If you decide to cancel your policy and switch insurers before 12 months are up, you might not get a full refund.
- Requires a bigger upfront payment: Full payment often earns a discount on car insurance, but paying for 12 months of coverage at once may not be financially feasible.
- May be harder to find: Since 12-month auto insurance policies aren't as widespread as six-month policies, finding one might require doing a little homework or even switching insurance carriers.
Should I Get a 6-Month or a 12-Month Car Insurance Policy?
Whether to get a six-month or 12-month car insurance policy depends on your situation. In general, you may prefer a six-month car insurance policy if:
- You want the flexibility to switch car insurance companies more often without paying fees for early termination.
- You expect a change that could lower your insurance premiums to occur within the next six months, such as an accident, moving violation or DUI dropping off your driving record.
- Your insurer offers a discount for paying your full car insurance premium upfront, but you can't afford to pay a year's worth of premiums at once. Paying for a six-month policy upfront could be easier on your budget.
A 12-month car insurance policy could make more sense if:
- You want to lock in your current car insurance rates longer. Knowing your car insurance costs will stay stable for an entire year can make it easier to budget.
- You can afford to pay annual premiums upfront. You'll enjoy any discounts for paying in full plus the peace of mind of being covered for a full year.
- You've added a teen or young adult driver to your policy. Risks are higher for young drivers, and so are insurance rates. When it's time to renew your policy, your premiums could rise even more if your teen or young adult driver has had an accident or moving violation since you added them to your policy. Buying 12-month car insurance lets you delay any impact that these incidents or claims may have on your insurance rates.
Frequently Asked Questions
Six-month car insurance policies are generally the standard. Insurers tend to prefer the six-month time frame because it gives them the opportunity to adjust their prices twice a year instead of just once. However, some insurance companies offer 12-month policies, depending on state laws and the company's policies.
Whether you choose a six-month or 12-month policy, car insurance companies typically offer the option to split your premiums into monthly payments. There may be a monthly fee or service charge for paying monthly with a credit or debit card. However, you can sometimes avoid monthly payment fees by scheduling autopay or paying via electronic funds transfer (EFT) directly from your bank account.
Short-term or temporary car insurance policies generally last 30 days and are designed for uninsured drivers who plan to borrow or rent a car. Most major auto insurers don't sell short-term policies, which provide only basic liability coverage. Better options include purchasing non-owner car insurance, buying insurance from the rental car company or renting a car with a credit card that offers rental car insurance. If you're borrowing a car from someone whose car insurance includes permissive use coverage, you may not need any extra insurance.
Choose the Right Car Insurance
Whether a six-month or 12-month auto insurance policy is right for you depends on your situation, preferences and budget. Regardless of the option you choose, shopping around for car insurance shortly before your policy is due for renewal can help you find the most affordable coverage.
Experian's car insurance comparison tool can help by gathering quotes from more than 30 top auto insurance providers all in one place. It's an easy way to compare coverage and costs so you can purchase the policy that's right for you.