6-Month vs. 12-Month Car Insurance Policies (2023)

The benefits of each auto insurance term differ. Compare the options presented here to find the best policy length for you.

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Looking for a new auto insurance policy? Insurance companies typically offer six-month or 12-month policies, and some offer both. Insurers offer six-month policies more frequently because the shorter duration allows them to change prices more often and stay competitive in the market.

But is a six-month policy right for you? Some drivers prefer the flexibility of a six-month policy because it allows them to compare car insurance rates more often and take advantage of an improved driving record. Others enjoy the stability of a 12-month policy because it provides predictable payment amounts for an entire year. Both options have their benefits and drawbacks to consider when you’re shopping for car insurance.

Quick Facts
  • Twelve-month car insurance policies are harder to find.

  • Car insurance rates may change every six months based on your insurer’s assessment.

  • Car insurance costs can vary depending on the length of your policy and various risk factors.

The basics of six-month and 12-month car insurance policies

Insurance companies may offer six-month or 12-month policies, but seldom offer both. A six-month car insurance policy fixes your rates at a set cost. Then, at the end of the policy period, you can choose to renew at a new rate, update your coverage, or discontinue your policy and move to another insurer.

The end of this six-month period also allows your insurance company to reevaluate your risk level based on your claim history, driving record, and other factors. Your insurer can then adjust your car insurance premium accordingly.

A 12-month car insurance policy works the same as a six-month policy, only for a longer duration. Monthly rates are locked in for a year, and you can choose to renew your policy at an updated rate, change your coverage, or switch insurance companies at the end of those 12 months.

On the differences between the two policy lengths, Ben Guttman, a broker at North Central Insurance Agency in Parkland, Maryland, says, “Usually it is carrier specific more than a hard rule. However, often carriers that take higher-risk drivers do six-month policies so they can reevaluate the rate faster.”

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Features of six-month and 12-month car insurance policies

Six- and 12-month car insurance policies share several common features.

Coverage amount

The amount of insurance coverage you need depends on your unique needs, what’s required in your state, and whether you want additional coverage.

Most states require you to carry at least bodily injury and property damage liability coverage. Other coverage types offered include:

  • Collision

  • Comprehensive

  • Personal injury protection (PIP)

  • Uninsured motorist


Whether you choose a six-month or 12-month policy, you’ll have to pay a premium. An insurance premium is the cost you pay for insurance coverage for your vehicle. You can often choose to pay the premium amount in full or through monthly installments. Some insurance companies offer you a discount for paying in full. If you do choose to pay in full, the amount will be due when your policy starts.

Good to Know

Insurers determine your monthly premium by assessing your risk level. Factors that can affect your monthly insurance premium include your:

  • Coverage type and amount

  • Vehicle

  • Age

  • Location

  • Driving record

  • Gender

  • Credit-based insurance score


Your car insurance policy also comes with a deductible. This is an out-of-pocket cost that you pay before your insurance policy covers any damages or losses. Your deductible affects your monthly premium cost.[1] Choosing a higher deductible can reduce your monthly premium, while choosing a lower one can cause your monthly costs to increase.


Raising your deductible isn’t the only way to lower your car insurance payment. Insurance companies often provide several other ways for you to save money on your car insurance through discounts. The available discounts vary depending on the insurance company.

Some common auto insurance discounts you may qualify for include:

  • Automatic payment discount

  • Away-at-school discount

  • Bundling discount

  • Early bird discount

  • Good student discount

  • Homeowner discount

  • Loyalty discount

  • Online quote discount

  • Paperless statement discount

  • Paid-in-full discount

  • Smart driver discount

  • Usage-based discount

Pros and cons of six-month car insurance policies

Six-month car insurance policies have some advantages over longer policies but also carry potential drawbacks.

  • Flexibility: You can switch insurance companies sooner if there’s an issue.

  • Driving record evaluated more often: Insurance companies assess your risk more often. If you have traffic violations coming off your driving record, you won’t have to wait as long to benefit.

  • Easier to pay in full: Paying your premium in full can earn you discounts. A six-month policy costs less to pay in full.

  • Tracking: Having a six-month policy means you have to renew it twice a year. If your insurance company doesn’t do this for you automatically and you forget to renew, you could have a lapse in coverage or miss a payment.

  • Rate increases: Your rates aren’t locked in for as long with a six-month policy, meaning they could increase with each renewal assessment.

  • Lost discounts: If you no longer qualify for a discount, you’ll lose those savings sooner with a six-month policy.

Pros and cons of 12-month auto insurance policies

A 12-month insurance policy also offers benefits and disadvantages, depending on your situation. Consider these factors in your decision when choosing a car insurance policy.

  • Rates locked in longer: One of the biggest benefits of a 12-month policy is that your rates are locked in for a year and won’t go up regardless of what happens.

  • Easier to remember: You only have to renew your policy once every 12 months, simplifying renewals.

  • Discounts last longer: Along with your rates, discounts you qualify for last 12 months even if your situation changes.

  • Harder to find: Not all insurance companies offer 12-month car insurance policies. 

  • Lose out on savings: If traffic violations fall off your record or your situation improves over the year, you have to wait longer to be reassessed and take advantage of potential savings.

  • Potentially poor service: If you’re unhappy with your insurance company, you must wait longer before you can switch.

How much do six-month and 12-month car insurance policies cost?

Depending on your insurance company, coverage type, and other factors, your costs may vary between six-month and 12-month policies.

For liability-only coverage, there’s little difference between six-month and 12-month car insurance policies. On average, consumers pay $198 monthly for liability-only coverage on a six-month policy and $195 monthly on a 12-month policy, according to Insurify data.

There’s a larger cost disparity for drivers with full auto insurance coverage. The average cost of full coverage on a six-month policy is $299 monthly, while a 12-month policy averages $273 per month.

Other factors that affect car insurance costs

The term of your policy is just one of several factors that can affect how much you’ll pay for car insurance. Other factors include your:

  • Age: Insurance companies typically charge higher rates to younger, less experienced drivers.

  • Coverage type: You must carry at least the minimum liability coverage in your state. Your insurance costs will go up if you choose to add any additional coverage, like comprehensive or collision coverage.

  • Driving record: Accidents and moving violations can cause your insurance premiums to increase.

  • Gender: Women generally pay less for car insurance than men due to a lower risk of accidents.

  • Location: Living in certain areas, like those with high crime rates, can lead to increased costs.

  • Vehicle: Insurance companies consider the value of your vehicle, potential repair costs, and theft risk when determining rates.

Which policy is right for you?

Finding the right car insurance policy for you may take some work. Research which options are available and whether an insurance company offers six-month or 12-month policies or both. Assess your finances, driving record, state requirements, and your situation to determine the best insurance policy for your needs.

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Who should buy six-month car insurance?

A six-month car insurance policy is best suited for drivers who:

  • Only need temporary coverage

  • Have a limited budget

  • Prefer to shop around more often

  • Have traffic violations falling off their driving record within the next six months

Who should buy 12-month car insurance?

A 12-month car insurance policy is best suited for drivers who:

  • Want to lock in insurance rates for a year

  • Plan to keep their vehicle long term

  • Enjoy predictable payments

  • Want to avoid the hassle of renewing twice a year

Six-month vs. 12-month car insurance FAQs

If you still have questions about which term length is right for you, you’ll find answers to some frequently asked questions below. And if you’d like to learn more about how you can lower your car insurance payment, check out the article: Why is my car insurance so high?

  • Is it better to pay car insurance annually or monthly?

    Annually, if you can afford it. If you have the means, paying your insurance in full can potentially lead to a discount, depending on your insurer.

  • Does car insurance get cheaper every six months?

    It depends. Car insurance costs can increase or decrease based on your insurance company’s assessment. Your costs may decrease if your credit has improved or traffic violations come off your driving record. Your costs could also increase if you were in an accident during your previous policy period or you no longer qualify for a discount.

  • Is six-month auto insurance worth it?

    It depends. If you have a good driving record, you may benefit from renewing your policy more often. A six-month policy lets you shop around for the best rates more often. Most insurance companies offer six-month auto insurance policies.

  • Can you switch your insurance company if you have an annual policy?

    Generally, you can switch your insurance company at any time, even mid-policy. Your insurance company may charge a policy cancellation fee for canceling your policy before it ends.[2]

  • What is the new car insurance grace period?

    When you buy a new vehicle, a car insurance company will typically extend you the same coverage as your previous policy during a period of up to 30 days known as the “grace period.” Always check with your insurer to make sure your new vehicle is covered.[3]


  1. Insurance Information Institute. "How to find the right auto insurance." Accessed April 25, 2023
  2. Connecticut General Assembly. "AUTO INSURANCE CANCELLATION FEE." Accessed April 25, 2023
  3. NC Department of Insurance. "Car Insurance FAQs." Accessed April 25, 2023
Kevin Payne
Kevin Payne

Kevin Payne is a freelance writer and family travel and budget enthusiast behind FamilyMoneyAdventure.com. His work has been featured in Forbes Advisor, CreditCards.com, Bankrate, SlickDeals, Finance Buzz, The Ascent, Student Loan Planner, and more. Kevin lives in Cleveland, Ohio with his wife and four teenagers.