Shopping for new car insurance requires a lot of decision-making, and one of those might be choosing between a 6-month car insurance contract or one with a 12-month term. The difference might seem subtle, but each type of policy has pros and cons. Bankrate’s insurance editorial team put together a guide that may help you choose the term length that best fits your needs.

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6-month vs. 12-month car insurance

When you get a quote for car insurance, you may have the option to choose between a six-month or a 12-month policy. While not all companies offer this option, knowing that different policy terms exist may be helpful. A six-month car insurance policy simply means that your policy is effective and priced for a period of six months before it will be up for renewal.

When an insurance policy renews, the insurance company may reevaluate certain aspects of the policy. For instance, the company may re-review the driving records for each person listed. Additionally, the company may review claim statistics in your area to determine if your current rate is enough to account for potential claims payouts. If recent statistics show that claims occur at a higher frequency and payout, your insurance company may apply a company-wide rate increase. Conversely, lower claims may result in lower rates at renewal. However, these rate changes can only be applied to a policy at the time of renewal, so a shorter policy term may allow rate changes to occur more frequently.

How does a 6-month car insurance policy work?

When you receive a quote for a six-month car insurance policy, you are selecting a set of insurance coverage types that will provide financial protection for the policy’s duration. The insurance company’s underwriting team will determine your premium based on various factors which may include your driving record, insurance history, location and vehicle type, as well as the level of coverage you select. Depending on what car insurance discounts you qualify for, your six-month insurance costs may be reduced.

When your policy term is nearing its end, your insurance company will evaluate your premium and send a new renewal offer which states that it will renew your policy for another six months at a specified rate which may be higher, lower or the same as your current premium.

Pros and cons of a 6-month auto insurance policy

While you may be used to carrying a semi-annual policy, it may be worth receiving a quote for an annual policy just to compare your costs. Here are a few pros and cons to a six-month auto policy:

Pros of a 6-month auto policy

  • Policy flexibility: Although you can switch auto insurance companies for any reason at any time, some carriers may apply a cancellation fee if you cancel your policy mid-term. If you are unhappy with your insurance carrier, a six-month policy means you may not have to wait as long for your renewal period to come up so you can change providers.
  • Driving activity is re-evaluated more frequently: Some people may benefit from more frequent policy reviews. High-risk drivers, for example, might find a six-month policy attractive. When tickets or accidents reach a certain age, typically three to five years, they may no longer be a surcharge on your policy. Each time your policy renews, your insurance company may remove any surcharges that no longer apply.
  • Paying in full may be more accessible: Some carriers extend discounts for customers who pay their policy in full, rather than in monthly installments. If paying a 12-month policy in full doesn’t work with your budget, opting for a six-month policy could make paying in full more accessible.

Cons of a 6-month auto policy

  • Premium increases: When you purchase a 12-month auto insurance policy, your premium will typically remain the same for an entire year (unless you make changes like adding or removing a vehicle or driver), but with a semi-annual policy that renews every six months, you could be facing rate increases sooner or more often.
  • Potential to forget renewal dates: When you purchase a 12-month policy, you have the option to pay for the entire expense of your policy for a full year upfront. When you have a six-month policy, you might be more likely to forget your renewal dates, since they occur twice a year, and could potentially miss a payment, causing a lapse in insurance coverage.
  • Possible missed discounts: If you no longer qualify for a discount after your policy renews, a six-month policy could mean you lose those savings sooner. Discounts for new policyholders, for example, could net more savings over a 12-month period.

Is a 6-month policy is right for me?

The best type of auto policy for you will likely differ based on your unique situation. Just because your friend is getting a great rate on their annual policy may not mean you will get the same rate if you switch from a six-month policy.

The cost of car insurance is based on a variety of factors that may greatly influence your decision to choose a longer or shorter policy duration. A six-month policy may be a great option if you prefer to have your risk re-evaluated on a more frequent basis, or if you are switching to a new carrier and are unsure if you will be happy with your choice.

Additionally, if you know you have a ticket or other traffic violation that is a few years old, you may not want to lock in your higher premium for a whole year with an annual policy. Some providers may not offer both a six-month and 12-month policy, so that is another factor you will likely need to consider.

Frequently asked questions

    • The length of your policy term does not typically impact your overall car insurance premium. It may, however, dictate how often your insurance company reviews your policy for company-wide rate increases and decreases. Additionally, surcharges associated with accidents and tickets may be removed at eligible renewals, so you might want to consider how much current activity you have on your driving record when choosing your policy term length.
    • Carriers typically offer the same discounts, regardless of policy length, but you may be able to verify a company’s discount policy by speaking with an insurance agent. Common discounts you may see include multi-car discounts, multi-policy discounts and good driving discounts.
    • Whether you pay your car insurance premiums in installments or in full likely depends on your financial situation and how you like to handle your bills. Generally, most insurance companies will offer several payment plan options to give customers the ability to make payments based on their individual financial situation. However, some companies offer discounts when you pay in full, which could be worth it to get the cheapest average six-month car insurance premium.
    • Some carriers may not offer six-month car insurance policies. Policy term lengths are specific to each company — some carriers may only write car insurance for six months, while others only offer 12-month terms (and some may give you the option of choosing either). You could contact an agent or request an online quote to see what policy term lengths a carrier may offer.