Six-Month vs. 12-Month Car Insurance: Which to Buy

You have two term options when you purchase a car insurance policy: six months and 12 months. Six-month policies are more common and can benefit drivers by granting them flexibility, but they also come with the risk of increased rates if you forget to renew before the term ends.

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Six-month car insurance policies are the standard for insurers and tend to be best for those who want the flexibility to switch carriers. On the other hand, a 12-month policy suits drivers who value consistent rates. Regardless of the duration of your policy, make sure to compare insurance quotes at the end of your term to evaluate your options and find the most affordable coverage.

Key Takeaways

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Six-month policies provide flexibility in rates and options for policyholders but include the risk of rate increases once a term is over.

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12-month policies can help you save in the long term but are less flexible.

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Six-month policies are the standard for most insurers, while 12-month policies can be difficult to find.

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Six-Month vs. 12-Month Car Insurance: Pros and Cons of Each

Insurers typically offer six-month car insurance policies over annual ones. This option gives you the flexibility to compare car insurance quotes after your term ends. However, it also means your rates can frequently change — which can be good or bad based on your driving record. On the other hand, annual policies lock your rates in for an entire year, but not all insurers offer them.

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Why Do Insurers Offer Six-Month Car Insurance?

Most insurers prefer a six-month car insurance policy to have the flexibility to recalculate your rates based on your driving record in the previous term. For instance, they can increase your premiums to cover their losses if you got into an accident during your last policy period. Alternatively, they can also lower your rates if you’ve had infractions removed, paid off car loans or improved your credit score.

Which Insurers Offer Annual Insurance Policies?

Not all insurers offer the option to purchase an annual car insurance policy, which means you may be stuck with a six-month policy depending on your provider. Of the major car insurers below, only three companies give you the option to have a 12-month term.

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  • Company
    Offers Annual Policy?
  • USAA
    Yes
  • GEICO
    No
  • State Farm
    No
  • Nationwide
    No
  • Allstate
    No
  • Progressive
    No
  • Travelers
    No
  • Farmers
    Yes
  • Liberty Mutual
    Yes
  • American Family
    No

Who Should Buy a Six-Month Car Insurance Policy?

Six-month car insurance policies can be beneficial for many drivers. Those who want to try out different insurers, for instance, can do so after every term, giving them a chance to find an insurer that suits them best.

Younger drivers getting car insurance can also benefit from such a short-term policy, especially if they have a birthday that falls within the next six months. As younger or first-time drivers looking for car insurance maintain a good driving record, their premiums may decrease each term.

A six-month policy can also benefit drivers who have improved their credit score, as car insurance for low credit holders is often expensive. Likewise, drivers who have had infractions — such as speeding tickets — removed from their records can benefit from a rate revision at their next policy renewal.

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THE PROS AND CONS OF SIX-MONTH CAR INSURANCE

Pros:

  • Allows you to shop for cheaper premiums after your term ends.
  • It makes it easy to switch providers if you aren’t satisfied.
  • It gives you the opportunity to reevaluate your car insurance needs after every term.
  • Could get better rates faster after paying off your car loan.
  • May receive lower rates in your next term if an infraction is taken off your record.

Cons:

  • Opens up the possibility for premium increases sooner and more often.
  • Increased chance of missing renewal dates due to the shorter term.
  • Discounts may not apply in the next term.

Who Should Buy a 12-Month Car Insurance Policy?

A 12-month term may suit some better than others. For instance, this duration is beneficial for those who maintain a good driving record and want to avoid a twice-annual increase in their premiums. In other words, it’s best for those who prefer consistency in rates over flexibility.

These policies may also benefit those who can afford to pay for an entire policy in full, as some insurers offer discounts for this. On the other hand, it’s also ideal for low-income individuals looking for car insurance who can’t afford any rate increases on a bi-annual basis. Locking in a single rate for the whole year can help in case you get into an accident.

If you expect to get a lower credit score within the year, purchasing a 12-month car insurance policy can be beneficial. This way, you’re sure that insurers don’t factor it into your rates for at least another year, giving you time to improve it before your next renewal.

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THE PROS AND CONS OF 12-MONTH CAR INSURANCE

Pros:

  • Benefit from a single rate for the whole term, regardless of infractions that may occur.
  • Pay one car insurance bill for the entire year.
  • Possibly lower the chances of forgetting to renew your insurance.
  • Potential to get discounts for having an annual term.

Cons:

  • The term must end before you can benefit from paying off car loans or infraction expirations.
  • Less flexible than six-month policies.
  • Lower rates aren’t guaranteed.
  • Difficult to find, as not all insurers offer this option.

How Much Do Six-Month and 12-Month Car Insurance Policies Cost?

When everything is kept equal, a six-month car insurance policy will cost about half as much as a policy with a 12-month term. For instance, at GEICO, a six-month auto insurance policy costs an average of $524, while a 12-month policy costs $1,047.

However, once the renewal period comes around for a six-month policy, rates may increase or decrease based on your driving record and how insurers calculate rates. Be sure to remember to renew your policy before it expires, as a lapse in coverage can increase your premium dramatically. If you’re interested in switching providers, your renewal period may also be the best time for you to compare quotes to find the cheapest car insurance for you.

View the table below to compare rates for six- and 12-month policies. Note that the rates mentioned don’t take potential auto insurance discounts into account, which could help you save significantly. For instance, you might be eligible for a “pay-in-full” discount if you can afford to pay your entire six-month or 12-month policy at once.

How Much Six-Month and 12-Month Car Insurance Policies Cost

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  • Company
    Six-Month Policy Cost
    12-Month Policy Cost
  • 1.
    USAA
    $442
    $883
  • 2.
    GEICO
    $524
    $1,047
  • 3.
    State Farm
    $618
    $1,235
  • 4.
    Nationwide
    $671
    $1,341
  • 5.
    Allstate
    $676
    $1,351
  • 6.
    Progressive
    $691
    $1,381
  • 7.
    Travelers
    $763
    $1,525
  • 8.
    Farmers
    $789
    $1,578
  • 9.
    MetLife
    $843
    $1,686

*These rates represent the cost of car insurance for a year calculated with Quadrant Information Services. For six-month policy rates, MoneyGeek simply divided annual costs in half.

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About the Author


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Mark Fitzpatrick is a senior content manager with MoneyGeek specializing in insurance. Mark has years of experience analyzing the insurance market and creating original research and content. He graduated from Boston College with a Bachelor of Arts and Johns Hopkins University with a Master of Arts.