12-Month vs. 6-Month Car Insurance
A six-month policy is the standard for car insurance policy periods. But depending on certain factors, like your credit score, driving record, age, and financial situation, an annual policy could work to your advantage.
When a 12-month policy could lower your rates
You already have a clean driving record. A 12-month car insurance policy is most effective when you already have cheap car insurance and want to lock in your premium to insulate it from potential rate increases. This is the case for safe drivers with a spotless driving history that can’t be improved upon.
You have the resources to pay your premium up front. Some policies with 12-month terms will actually require you to pay the full premium at the time of signing, but if that’s not the case, you can often save a bit of money by paying your auto insurance bill for the entire year in one go. This depends on the insurance provider.
Your finances and personal life aren’t changing. If you’re paying down credit card debt or other loans, moving to a cheaper place, or becoming a homeowner, you shouldn’t opt for a 12-month policy. This is because those changes will improve your credit score, unlock discounts, and likely lower your insurance costs. But with a 12-month policy, your rates won’t be able to lower until the policy renews in a year.
When a 12-month policy might not save you money
If, in the coming year, it’s possible that changes in your life could help you bring your auto insurance rates down, you will want a six-month policy so that you can update your premiums and save money sooner rather than later. A six-month policy will be a better option for you if:
Your driving history has violations that will be wiped from your record during the year. When car insurance companies renew your policy, they apply rate revisions as your driver profile evolves. So if you have speeding tickets or at-fault accidents that might be removed from your record within six months, you shouldn’t miss out on lower rates.
You’ll soon become eligible for driver discounts. Becoming a homeowner and/or purchasing home insurance can unlock a discount with most insurance agencies, so if this is possible for you in the coming year, you’ll want a six-month car insurance policy. This applies to other driver discounts like defensive driving courses, too.
You can’t find cheap auto insurance quotes for an annual policy. Because insurance agencies don’t love writing 12-month car insurance policies, they’re not always the cheapest. Get free quotes from as many insurance providers as you can before signing your policy.