Six-month car insurance vs. annual car insurance: Which is better?
While the differences between a six-month and an annual policy are marginal, you may prefer one over the other.
With a six-month policy, your insurer can change your premiums every six months. So, if you’re unhappy with your rate or aren’t receiving satisfactory service, you can switch car insurance companies after your policy term is over without paying possible cancellation fees.
With a six-month policy, you can also see lower rates sooner if a traffic violation fell off your record. However, you may also see an increase in rates if you get another driving violation or file a claim.[2]
With a 12-month policy, you get fixed rates for the entire year. If your auto insurance rates are already affordable and you’re happy with your current company, you may not mind renewing your current policy.
A 12-month term may benefit drivers who prefer managing their auto insurance policies as little as possible. With this term length, you only need to keep track of renewing your policy and premium changes once a year.
When six-month car insurance makes sense
If you’d like the flexibility to switch providers and get better rates, you can save up to hundreds of dollars by shopping for car insurance every six months.
If you expect your risk profile to change in the next six months, you may benefit from a shorter policy length.
For example, your age influences your policy’s premium. When you turn 25, your premiums may decrease significantly, given you have a clean driving history. If you turn 25 in the next six months, consider a six-month policy to get a potential rate reduction at renewal.
Six-month car insurance is also suitable if you expect an increase in your credit score, improvements to your driving history, or old traffic infractions to fall off your record in the next six months, which could lower your rates.
Keep in Mind
If you finance your car, your lender may require collision and comprehensive coverage, making your insurance rates costlier.[3] If you expect to pay off your car loan in the following six months, you may want to remove those coverages at renewal. However, removing these coverages generally isn’t advisable unless you have an older car.
Car insurance for six months lets you search for new coverage options and compare rates sooner than a 12-month policy would.
When 12-month car insurance makes sense
A 12-month car insurance policy may be optimal if you expect your situation to stay the same and prefer to lock in your premiums for the year. If you’re busy, you may prefer a 12-month policy so you don’t have to keep up with premium changes, shop for new rates, and renew your coverage as often.
