Six-Month vs. 12-Month Car Insurance Term: What’s Best?

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by Quiana Darden Updated June 6th, 2022

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Are you in the process of purchasing a new car insurance policy or renewing your current one and can’t decide between a 6 or 12-month term? Each option has its benefits. For example, if you go with a 6-month plan, you have the flexibility to make changes to your policy or change insurance companies more frequently. Opt for a 12-month plan and your policy is locked in for a year – but at least that’s one thing off your plate for the year.

Depending on how you look at it, you might find a shorter or longer-term to be a better option.

To help you get a more comprehensive understanding of which is best for you, let’s explore the advantages of both six and 12-month car insurance policies.

Pros of Six-Month Car Insurance

  • Maintain Flexibility in Your Coverage: You may discover that your insurance needs have changed since you got your policy. Getting married, purchasing a new car, or changing your driving habits can impact your insurance rates for the better. Having the flexibility to reevaluate your needs on a bi-annual basis keeps you from being stuck in a year-long insurance policy that no longer provides the coverage you want at a desirable rate.
  • Review Your Terms: Also, getting a shorter policy term allows you to review your auto insurance terms twice per year to make sure you’re still getting the best rate.
  • Shop Around for the Best Coverage: Shopping around to find the best insurance for your evolving needs might also allow you to get a policy with lower deductibles, higher term limits, and discounts, all at a cheaper rate.
  • See Your Rates Drop Sooner: If you’ve taken a driving course or infractions have been removed from your record, you could see a reduction in your policy rate sooner.


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5 Times You Can Lower Your Rate With a Six-Month Insurance Policy

It’s uncommon for an insurance company to adjust your rate during your term because it’s locked in. As a result, having a 12-month insurance policy will cause you to miss out on opportunities to save money on your car insurance. A six-month insurance term on the other hand gives you the flexibility to change your policy more – and likely save.

Below, let’s explore five times when having a six-month insurance policy can save you money sooner.

1. You Get Married

If you’ve recently said “I do,” chances are, you can save money on your car insurance premium. Insurance companies view married couples as more stable and less likely to drive recklessly. They also expect married couples to join policies which means more business for them and a multi-car discount for you. If you and your spouse own a home, it is more likely that you’ll bundle your homeowners and vehicle policies into one, leading to a multi-policy discount.

2. Your Driving Record Improves

Driving infractions and traffic violations can cause an increase in your insurance rate. Insurance companies view you as a higher risk, so they charge you more to insure your vehicle. However, taking driver improvement courses can improve your driving record by adding good points. Over time, your infractions will fall off as well. Keeping track of your driving history and knowing when it improves could benefit you when you review your auto insurance rates every 6 months.

3. You Hit a New Age Category

Generally speaking, the older you get, the more favorably you are viewed by insurance companies. Insurers believe the more experience you have behind the wheel, the less chance you’ll be involved in an accident or display risky driving behaviors. An 18-year-old’s policy will probably be far more expensive than a 30-year-old’s. And a 30-year-old will likely pay more insurance than a 50-year-old.

Saving money due to your age is even more of a reason to choose a 6-month policy and check out other insurance companies to see if there are opportunities to reduce your insurance premiums.

4. You Move

One of the factors insurance companies consider when determining your insurance cost is location. They look at the overall claim statistics in your area. If you live in an area that’s more metropolitan and has a higher density of people, there’s a chance the rate of accidents is more elevated. Compared to a rural area with far less traffic and people, which likely has a much lower claims rate.

If you’ve recently moved or plan to do so soon, you can get quotes from other insurance companies to see if cheaper car insurance rates are available.

5. You Improve Your Credit

Credit scores determine financial responsibility based on your credit usage and payment history for your bills. The higher your credit score, the more financially responsible you appear to insurers. That’s when applying for auto insurance, your credit score scores factor into your premium.

Paying off loans, reducing your credit usage, and avoiding collections or judgments can improve your score, which usually updates every 30 days. Knowing this makes it ideal for you to check out other companies for more affordable rates. Chances are, you will save money while getting insurance that’s best for you.

Cons of a 6-Month Car Insurance Policy

While there are many reasons to choose a 6-month car insurance policy, here are a few reasons you may choose to opt for a longer plan.

  • Your Rate Could Increase More Often: While having the flexibility to compare rates can keep your premiums low, the opposite could also occur. There’s a chance that factors in your background and driving record could change leading to higher rates.
  • You Might Forget Your Renewal: With one more thing to remember, you could forget to renew your policy leading to a lapse in your insurance – a costly mistake.
  • You Miss Discounts: Just like your premium could increase after 6 months, your discounts could go away if it’s found you no longer qualify, leading to higher rates.

Pros of 12-Month Car Insurance

Men from insurance company examining a car after an accident

When choosing a car insurance policy, one of the factors you need to consider is how long you want to lock in your rate.

  • Lock In Your Rate: If you choose a 12-month policy term, regardless of the positive or negative things that could impact your insurance rate, you’ll be locked in for that 12-month duration.
  • Don’t Worry About Renewals: Since you only have to renew once per year, you’re less likely to forget your renewal and have a lapse in your coverage.
  • Get an Annual Payment Discount: If you can pay your entire 12 auto insurance premium in one payment, most companies will offer you a discount.

Keep in mind that while insurance companies won’t reassess your driving profile until the end of your 12-month cycle there is no guarantee you won’t see changes in your insurance premium. If you initiate changes to your current policy, such as moving, getting married, purchasing a new car, or changing the levels of insurance coverage, you may see a change immediately.

Cons of a 12-Month Car Insurance Policy

If you’re considering going with a 12-month insurance term, keep these things in mind.

  • Not All Insurers Offer It: You might have to do a bit of digging around to find an insurance company that offers 12-month terms
  • You Won’t See Changes Reflect In Your Rate: If speeding tickets drop off your record or your credit score increases you won’t see the benefits of those changes in your rate until your term expires.

What Makes a Bigger Difference: Discounts or Policy Terms?

Expect to pay about the same for car insurance regardless of the length of your policy term. The key to getting the most affordable insurance is shopping around for quotes and maximizing all available discounts.

Insurance companies offer these discounts to qualified drivers as an incentive to get their business. Customarily, discounts fall into three general categories – driver, policy, and vehicle-based. Let’s explore them below.

Driver-Based Discounts.

Driver-based discounts directly correlate to your lifestyle, and insurance companies factor in your age, driving history, and professional affiliations. Let’s explore some ways you can save money on your car insurance based on your driving habits:

  • Safe Driver Discount: If you have not been involved in at-fault accidents or received a ticket within a certain period.
  • Good Student Discount: If you or a student on your policy maintain a particular grade average in high school or college.
  • Defensive Driver Discounts: If you have taken a certified defensive driving course to improve your record or avoid an infraction.
  • Military Employee Discount: If you currently serve in the military, National Guard, or Reserves, or have retired from duty.
  • Professional Affiliation Discount: If you are a member of a participating sorority, fraternity, group, trade, or professional organization.

Policy-Based Discounts.

As the name implies, policy-based discounts are directly affected by how your auto policy is structured. Here are some discounts you should keep in mind when searching for affordable car insurance:

  • Pay-In Full Discount: Pay your auto policy in total upfront and you could get a discount from your insurance company.
  • Policy Renewal Discount: Your insurance company might offer you a discount for your loyalty during renewal.
  • Automatic Payment Discount: Insurance companies prefer policyholders to sign up for automatic payment to ensure their auto premiums are made promptly and will reward you for doing so.
  • Paperless Discount: When you receive all of your documentation online or via your email, insurance companies are relieved from the costs of having to send paper documents to you via mail.

Vehicle-Based Discounts.

Vehicle-based discounts focus primarily on the safety features of your car. Insurance companies understand the safer your vehicle is to drive, the less likely you are to be injured in an accident or injure someone else. In addition, they anticipate in case of an accident, the costs to repair your vehicle will be less expensive.

Here are discounts you may qualify for based on the car you drive:

  • Air Bag Discount
  • Daytime Running Lamps
  • Anti-Lock Brakes
  • Anti-Theft System
  • Side Mirror Warning System
  • Automatic Braking
  • Vehicle Tracking System
  • Car Theft Deterrent System

Should You Buy Six or 12-Month Car Insurance?

Man driving his car with a 12 month insurance policy

Choosing whether to buy a six or 12-month insurance policy is ultimately up to you.

Here’s a quick summary of when a 6-month policy and 12-month policy are best for you.

Consider a 6-month auto insurance policy when…

  • You anticipate your driving record, credit score, or other factors that influence your rates to improve within the next 6 months
  • You plan to pay off your auto loan within the next 6 months
  • You want to ensure you’re keeping the most affordable rate for your coverage

Consider a 12-month auto insurance policy when…

  • You plan to pay your annual premium upfront to secure a pay in full discount
  • You enjoy the security of locking in your rate for 12 months
  • You are a safe driver with a clean driving record
  • You care more about the ease of keeping your rate the same than securing the most affordable premium

Next Steps

Now that you better understand the benefits and downsides of both six and twelve-month car insurance policies, remember that no matter how long your term is you should compare quotes.

At Compare.com we make the process simple by comparing rates from 70+ companies and presenting you with a list of the most affordable plans that meet your insurance needs.


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Frequently Asked Questions

Will I save money if I choose a 12-month insurance policy?

Not necessarily. Twelve-month insurance policies do not automatically reduce your insurance rates; a 12-month policy could cause you more money in the long run though. If you experience positive life events such as better credit or infractions dropping from your driving record, it won’t positively impact your rates until the end of your 12-month term.

Will a six-month insurance policy reduce my rate?

You can see a reduction in your 6-month insurance policy at renewal. You’ll likely notice savings if you’ve maintained a clean driving record with no accidents or infractions.

When should I review my insurance discounts?

Whether you choose a six- or a 12-month insurance policy, you should thoroughly review available car insurance discounts before your renewal period. It is always a good idea to get a new quote from your current insurance company to compare it to quotes from other insurance companies.

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