What is 6-month car insurance?
Shopping for new car insurance necessitates numerous decisions, one of which may be deciding between a 6-month car insurance contract and one with a 12-month term. Although the distinction may appear minor, each type of policy has advantages and disadvantages. The insurance editorial team at StrongInsurance put together a guide to help you choose the term length that best suits your needs.
6-month vs. 12-month car insurance
When you get a car insurance quote, you may be able to choose between a six-month and a 12-month policy. While not all companies provide this option, being aware of different policy terms may be beneficial. A six-month car insurance policy simply means that your policy is valid and priced for six months before it must be renewed.
When an insurance policy is renewed, the insurer may reassess certain aspects of the policy. For example, the company may re-examine each person listed driving records. Furthermore, the company may examine claim statistics in your area to determine if your current rate is adequate to cover potential claim payouts. If recent statistics show that claims are being filed and paid out at a higher rate, your insurance company may implement a company-wide rate increase. Lower claims, on the other hand, may result in lower rates at renewal. However, because these rate changes can only be applied to a policy at the time of renewal, a shorter policy term may allow for more frequent rate changes.
How does a 6-month car insurance policy work?
When you get a quote for a six-month car insurance policy, you're choosing a set of insurance coverage types that will provide financial security for the duration of the policy. The underwriting team at the insurance company will determine your premium based on a variety of factors, including your driving record, insurance history, location and vehicle type, and the level of coverage you choose. Your six-month insurance costs may be reduced depending on which car insurance discounts you qualify for.
When the term of your policy expires, your insurance company will evaluate your premium and send you a new renewal offer stating that it will renew your policy for another six months at a specified rate that 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 accustomed to carrying a semi-annual policy, it may be worthwhile to obtain a quote for an annual policy in order to compare costs. Here are some advantages and disadvantages of a six-month auto policy:
Pros of a 6-month auto policy
- Policy flexibility: Although you can switch auto insurance companies at any time for any reason, some carriers may charge a cancellation fee if you cancel your policy in the middle of the term. If you are dissatisfied with your insurance provider, a six-month policy means you won't have to wait as long for your renewal period to come around so you can switch.
- Driving activity is being reviewed more frequently: More frequent policy reviews may benefit some people. A six-month policy, for example, may appeal to high-risk drivers. When tickets or accidents reach a certain age, usually three to five years, they may no longer be subject to a policy surcharge. When your policy is renewed, your insurance company may remove any surcharges that are no longer applicable.
- Paying in full may be more convenient: Some insurance companies offer discounts to customers who pay their policy in full rather than in monthly installments. If paying for a 12-month policy in full does not fit your budget, a six-month policy may make paying in full more feasible.
Cons of a 6-month auto policy
- Premium increases: When you buy a 12-month auto insurance policy, your premium will usually stay the same for the entire year (unless you make changes like adding or removing a vehicle or driver), but if you buy a semi-annual policy that renews every six months, you may face rate increases sooner or more frequently.
- Potential to forget renewal dates: When you purchase a 12-month policy, you have the option of prepaying the entire cost of your policy for the entire year. With a six-month policy, you may be more likely to forget your renewal dates because they occur twice a year, and you may miss a payment, resulting in a lapse in insurance coverage.
- Discounts that may have been overlooked: If you are no longer eligible for a discount after your policy renews, a six-month policy may mean you lose those savings sooner. Discounts for new policyholders, for example, could result in more savings over the course of a year.
Is a 6-month policy right for me?
The best type of auto policy for you will most likely depend on your specific situation. Just because your friend has a great rate on an annual policy does not guarantee that you will get the same rate if you switch from a six-month policy.
The cost of car insurance is determined by a number of factors, which may have a significant impact on your decision to choose a longer or shorter policy duration. A six-month policy may be a good option if you prefer to have your risk assessed more frequently, or if you are switching to a new carrier and are unsure if you will be satisfied with your decision.
Furthermore, if you are aware of a ticket or other traffic violation from a few years ago, you may not want to lock in your higher premium for an entire year with an annual policy. Some providers may not provide both a six-month and a 12-month policy, so that is another factor to consider.