6 month vs. 12 month car insurance

chee gin tan/Getty Images

Most auto insurance policies last for either six or 12 months — but choosing between these options is not always straightforward. Not all insurance companies offer policyholders a choice of policy terms, and while each policy length has benefits, there may also be disadvantages. In this article, Bankrate’s insurance editorial team breaks down the costs and benefits of a six month vs. 12 month car insurance policy to help you make an informed decision for your finances.

6-month vs. 12-month car insurance policies

The primary difference you will find when comparing a six-month vs. 12-month car insurance policy is the duration of the coverage period. A six-month policy will be re-evaluated twice a year, meaning your premium can be adjusted this many times each year. A 12-month policy will only undergo this review process once per year. The review, which takes place at the end of your policy term, will evaluate your claims history, driving record and other factors that may ultimately affect the ongoing cost of your auto coverage.

The length of your policy term can also affect upfront costs if you pay your premium in full. Paying in full rather than in monthly installments can often net you a discount from your insurer, and the total premium for a six-month policy is typically more manageable than a full 12-month premium. However, if you choose to pay in monthly installments, you may not see a significant difference in the cost of car insurance for a six-month vs. a 12-month policy.

What is a 6-month car insurance policy?

When you shop for car insurance, you may have the option to choose between a six-month or a 12-month policy. While not all companies give you this choice, 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.

Pros of a 6-month auto policy

• Policy flexibility: While you can switch auto insurance companies for any reason at any time, some insurance providers may charge a cancellation fee if you end your policy before the term expires. If you are unhappy with your insurance carrier or have found a better option elsewhere, a six-month policy means you would not have to wait as long for your renewal period. This provides additional flexibility if you should choose to 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 drop off your driving record, typically after three to five years, there 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 insurance carriers offer discounts for customers who choose to pay their policy in full upfront instead of paying the premium in monthly installments. This option is available for both six and 12-month policies, but it may not be possible to pay for a full year upfront. If paying a 12-month policy in full doesn’t work with your budget, choosing a six-month policy could make paying in full more accessible and allow you to qualify for the discount.

Cons of a 6-month auto policy

• More frequent premium recalculations: If you buy a year-long car insurance plan, your cost usually stays steady for the whole year unless you make changes like adding or removing a vehicle or driver. However, with a six-month policy that renews twice a year, you could see your premium fluctuate more frequently — and with inflation driving up the cost of coverage across the board, those fluctuations could raise your costs.
• 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 are benefiting from a discount that only applies to a single policy term, a six-month policy could mean losing those savings sooner than if you were locked in for a full year. For example, a discount for new policyholders could provide more savings over a 12-month period.

What is a 12-month auto insurance policy?

A 12-month auto insurance policy is the same as a six-month policy, except that it is active for 12 months instead of six months. Many major carriers only offer six-month policies, but some may give you the option of choosing between the two (or only give you the option of a 12-month policy).

Pros of a 12-month auto policy

• Less frequent premium fluctuations: Suppose you cause an accident during your policy term that will lead your carrier to add a surcharge to your policy at your renewal. In that case, you could have more time surcharge-free on a 12-month policy because you’ll have more time between renewals.
• May be easier to remember renewal dates: Since a 12-month auto policy has half as many renewal dates as a six-month policy, you may be more inclined to remember your policy renewal date. This could be important for policyholders who aren’t on auto-pay and prefer to pay in full.
• May not need to requalify for discounts as often: Periodically, you might be required to provide proof to maintain some discounts (the good student discount, for example). Although your car insurance company probably won’t need you to provide proof at every renewal, it will most likely be on a renewal date when you do have to send in documentation. Since renewals happen less frequently with a 12-month policy, you may be able to cut down on how often you send paperwork to your carrier.

Cons of a 12-month auto policy

• Less policy flexibility: Some companies charge an early cancellation fee if you terminate your policy in the middle of your term. If you want to cancel but also avoid this fee, you’ll have to wait until your renewal date (which could be further on a 12-month auto policy vs. a six-month auto policy).
• Driving activity isn’t re-evaluated as frequently: Because a 12-month policy doesn’t renew as frequently as a six-month policy, surcharges for accidents and tickets are not removed as often. For instance, if an accident surcharge reaches maturity and is eligible to be removed in June, but your policy doesn’t renew until December, you’ll have to wait until December for the surcharge to “drop off.”
• Harder to pay in full: Although your premium may not differ much on a 12-month car insurance policy compared to a six-month policy, it could be harder to pay a 12-month policy in full since you will be paying for the entire year’s worth of insurance upfront.

Are 6-month auto policies more expensive than 12-month policies?

The length of your policy term does not typically impact your overall car insurance rate. 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.

On average, car insurance costs $194 per month for full coverage and $53 per month for state minimum coverage. Remember that your rate will vary based on your personal rating factors like your driving record, claims history, vehicle type and more.

How do I know which policy is right for me?

To determine whether a 12- or six-month car insurance policy is best for your budget and insurance needs, you may want to speak with a licensed insurance agent. As you consider your options, ask yourself and your agent questions like:

• Could I pay my premium in full? If you’re able to pay your premium in full, some insurers offer a discount, typically around 10 percent off the total cost of your policy. Depending on your budget, a six-month policy could be an advantage if you’re hoping to pay in full.
• Are tickets or accidents likely to age off my record in the next six months? If you have a surcharge on your auto insurance rate due to a driving violation or accident, it will typically stop affecting your insurance rates three to five years after the incident. Depending on the timing, a six-month policy could mean your premium has a chance to decrease earlier than with a 12-month policy.
• Do I qualify for discounts that apply to a single policy term? Some auto insurance discounts, such as new customer discounts and telematics discounts, may only apply to a single policy term, often your first. In some cases, opting for a 12-month policy could mean that you benefit from a discount for a longer period.

Opting for a six-month policy could be wise for drivers with a clean record and no recent claims or major violations, or those with violations likely to age off their record in the near future. If you’re okay with undergoing a rate review every six months and value the flexibility to cancel more frequently without facing fees, a six-month policy might suit you.

On the other hand, a 12-month policy might be the cheapest car insurance option for some, as it avoids the risk of twice-yearly premium increases and locks in your rate for a full year. Keep in mind that not everyone qualifies for a 12-month policy. Some companies default to 12-month terms but offer six-month terms to drivers with poor records or credit.

Frequently asked questions

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

  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.

• Do all carriers offer 6 month car insurance policies?

  Not all carriers offer six-month car insurance policies. Companies dictate the terms of their policies and may only offer specific lengths for certain policy options. Some may exclusively offer six-month car insurance, while others may only offer 12-month policy plans. Contact your provider and ask to speak to an agent or request an online quote to determine what policy lengths are available to you.

• How long does car insurance last?

  Most car insurance policies last six or 12 months, depending on the coverage you choose. Regardless of the term length, most policies automatically renew at the end of the term unless you cancel the coverage.

• Can you get month-to-month insurance?

  The shortest term available for car insurance is generally six months. Some providers may offer shorter terms, but it is not a common practice. However, you can typically purchase a six- or 12-month policy and cancel it midterm if you no longer need the coverage or if you have replaced your car insurance with another provider. You may be charged a cancellation fee though, so check with your carrier for the specifics. If price is a concern, most insurance carriers allow you to pay for six and 12-month policies on a monthly basis, although there is often a slight surcharge for not paying in full.