Six-Month vs. 12-Month Car Insurance: When is One Better and Why

Six-month car insurance offers more flexibility. However, if you can get a 12-month policy, you may lock your auto insurance rates for longer.

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Updated May 13, 2024
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As you review your auto insurance quotes, you may notice that some insurers offer six-month or 12-month durations. Each policy length may offer certain advantages and disadvantages.

For example, six-month policies may give you more flexibility and discounts, but their premium may increase more often. 12-month policies may let you lock your premium for longer, but they aren’t as easy to find and may reduce your policy flexibility.

So, which one should you choose? Let’s explore the main similarities and differences to help you decide.

In this six-month vs. 12-month car insurance comparison

Six-month vs. 12-month car insurance policies

Six-month and 12-month policies have many things in common while allowing customers to choose payment terms that work best for them. Although there is likely no wrong answer to the policy term you pick, being strategic about the available options can help you make the most out of your insurance dollars.

Six-month car insurance 12-month car insurance
Flexibility Allows you to review or change your policy twice a year Lets you review or change your policy once a year
Premium revisions The car insurance provider can review and change your rates up or down twice a year The car insurance provider can consider and adjust your premium up or down once a year
Insurer availability Offered by most car insurance companies Offered by a few auto insurance companies and might not be available to you based on driving history or credit score
Discounts Allows you to add in new discounts you qualify for in six months or less Allows you to add in new discounts you qualify for in 12 months or less

What is a six-month car insurance policy?

A six-month car insurance policy is a policy that provides coverage for six months as long as you pay your premium. You can choose to renew or find other coverage without penalty six months after starting the policy.

Having a six-month policy means that if you need to change your coverage, end your policy, or search for a better rate, you can do so twice a year. Because you can make changes twice a year, you have two opportunities to avoid cancellation or change fees for any coverage you need to add or remove from your policy.

Keep in mind
Six-month auto policies are standard for most insurance companies. You may find it challenging to find insurers that offer shorter or longer terms.

Each time your auto insurance policy expires and renews, the insurance company reviews your policy premium and adjusts the amount you pay. It will also implement any new discounts you qualify for or any coverage changes you request. This can be a double-edged sword:

  • You may get a lower rate sooner: Qualifying for new discounts, significantly improving your credit score, or having a ticket or accident fall off your driving record often leads to lower auto insurance rates.
  • You may get higher rates sooner: Receiving a ticket, getting into an accident, or facing an overall increase in insurance premiums may push your insurance rate higher.

What is a 12-month car insurance policy?

Twelve-month auto insurance policies provide coverage that lasts 12 months from the first day of the policy. These policies allow you to make penalty-free changes once a year, which may be an advantage or a disadvantage, depending on your situation:

  • You may keep your rates low for longer. Because auto policies tend to get more expensive over time, an annual policy means you won’t have to worry about increases more than once a year. Your premium price will stay the same for an entire year unless you add a driver or vehicle or change your coverage before the policy period ends.
  • You may have to wait to make changes. Guaranteeing your rate for an entire year means that if you’re unhappy with your policy, need to make changes, or want to cancel, you’ll have to wait until the term is up. Otherwise, you may face fees.

Twelve-month car insurance policies are less commonly available, so you may have a challenging time finding a company that offers one.

Limited availability
Even among companies that offer both six- and 12-month policies, some may withhold 12-month policies from customers with poor credit or bad driving records.

What both car insurance policies share

Six-month and 12-month insurance policies share several similarities. For example:

  • Coverage: Both policy terms often offer the same coverage options, so you’re simply choosing whether you want to reevaluate in six months or a year.
  • Premium: Both policy premiums can be somewhat similar. However, if you have an accident or a speeding ticket, and your rate changes twice a year, you will see the rate increase sooner than you would with a 12-month policy.
  • Relevant factors: There are various factors that affect car insurance rates, such as your driving record, age, location, and even your credit history and score. These factors affect both six-month and 12-month policy terms similarly.

As you search for the best car insurance, remember that the policy term is less important than ensuring you’re getting the coverage you need at a reasonable price.

5 important differences between six-month and 12-month car insurance

Although six-month and 12-month auto insurance policies are relatively similar based on the type of coverage you choose, there are some critical differences to be aware of.

1. Policy flexibility

You may have more flexibility with a six-month policy because you’ll have the opportunity to review your insurance needs twice a year. A 12-month policy allows you to make changes once a year. If you like to regularly search for the best deals and ensure you’re getting the best price possible, you may prefer a six-month policy.

Winner: Six-month car insurance policies offer more flexibility than 12-month policies.

2. Premium revisions

Your insurance agency reviews your premium every time you renew your policy. Factors such as new violations or accidents on your record, or overall higher premium costs for other reasons, may push your policy cost higher following a revision.

A six-month policy allows the insurer to review your premium once every six months. If you have a 12-month policy, you’ll lock in the same rate for a year, regardless of changes in the market that may push insurance costs higher. Just be prepared for an increase when your 12-month policy expires.

Winner: 12-month auto insurance coverage allows you to maintain a lower premium for longer than six-month coverage.

3. Policy availability

Six-month insurance policies are the industry standard and are more readily available than 12-month policies. You may have to hunt for a 12-month policy, and your preferred insurance provider may not offer it or may reserve it for certain criteria, such as good credit or a clean driving record.

Winner: Six-month car insurance is easier to find than 12-month car insurance.

4. Potential discounts

Having a six-month policy lets you take advantage of any discounts you qualify for sooner. Positive changes to your credit score, driving record, or other factors may qualify for more discounts, and you can implement them sooner with a six-month policy. Having a 12-month policy means you need to hold until your policy renews, which may entail a longer wait.

Winner: Six-month policies allow you to benefit from new discounts you qualify for sooner than 12-month policies.

5. Lower rates

Reducing your coverage or switching insurance companies to get a better rate is quicker with six-month car insurance. If you want to exclude coverage after paying off your car loan, or increase deductibles for an aging car, you can do that sooner with a six-month auto insurance policy compared with 12-month coverage. The same logic applies to switching your auto insurance to a different provider offering a lower rate.

Winner: Six-month policies enable you to adjust or switch your policy without waiting as long as with 12-month policies.

Which car insurance policy should you choose?

Knowing how you like to approach your finances can be the most significant factor in deciding between a six-month and a 12-month policy.

  • If you need to make frequent changes to your policy, you may prefer a six-month policy.
  • If you like having a rate you can count on with fewer surprises, a 12-month policy may be a better option.

For example, if you improve your credit score or work from home and drive less, you may qualify for additional discounts or lower rates.

With a six-month policy, you’ll be able to take advantage of your new discounts sooner. If something isn’t working for you with a 12-month policy, you may have to wait double the time before getting your new discount or lower rate.

On the other hand, people who like knowing what they need to pay each month, and who have a clean driving record and a strong credit score, may benefit more from a 12-month policy. This set-it-and-forget-it 12-month term allows you to take your mind off your auto insurance policy for a year.

FAQs about six-month and 12-month car insurance

Is it better to pay car insurance monthly or every six months?

In some cases, it’s cheaper to pay your car insurance premium in one lump sum every six months because some insurance companies may offer a discount for full payments. However, if paying the entire premium upfront will cause you financial hardship, you may be better off with monthly payments.

What is a 12-month policy premium?

A 12-month policy premium is the total amount you pay for a car insurance policy that provides 12 months of coverage, often divided into monthly payments.

Instead of the standard six-month car insurance policy, your coverage extends to a full year, and your rate doesn’t change until the policy expires. Your premiums can still go up at the end of the year, so be prepared.

Does insurance get cheaper after six months?

Car insurance doesn’t usually get cheaper after six months of having a policy. Although insurance rates can vary based on several factors, including your driving record, age, location, and credit score, staying with the same insurer for more than six months doesn’t often provide a lower price. That being said, some auto insurance providers reward loyal customers with discounts when they complete a year, three years, five years, or more with the company.

Bottom line

Although you’re required to carry minimum amounts of coverage in most states, the type, amount, and length of coverage come down to what you need and what you’re comfortable with. Choosing between six-month and 12-month car insurance comes down to the available options and how you like to manage your money.

Six-month policies are more readily available and offer more flexibility and a better ability to take advantage of new discounts. Twelve-month policies allow you to lock in your insurance rate for a year, which may delay potential premium increases.

Before committing to a policy, be sure to compare rates and get multiple car insurance quotes to get the best deal. Learn how to switch car insurance if you’re thinking about working with a new policy provider. You can also get tips on how to save money on car insurance.

  • You could save up to $500 with some companies
  • Compare dozens of providers in under 5 minutes
  • Fast, free and easy way to shop for insurance
  • Quickly find the perfect rate for you

Author Details

Kate Daugherty

Kate Daugherty is a professional writer with a passion for providing others the head start they deserve on their financial journeys. Largely self-taught, Kate relied on books, blogs, and trial-and-error to learn how to budget and save for the future, all while working to pay back about $15,000 in student loans.