Although shopping for auto insurance is not the most exciting thing about owning a car, Bankrate makes it a priority to help you understand the options and navigate the process. It is crucial to understand the options available to you to adjust and evaluate your auto insurance coverage, as your needs change over time. Drivers may not know that auto insurance policies can be renewed annually or semi-annually. There are many benefits and drawbacks to every policy type. However, the most popular car insurance policy is the 6-month one. This article will explain why.
What is 6 Month Car Insurance?
Many insurance companies will offer a quote on car insurance for six-month policies. A six-month policy means your policy will be in effect (and priced) for six months before it is up for renewal. This is because the insurance agency can reevaluate the driver’s situation, level of risk, as well as determine if changes to the premium should be made.
Insurance companies will review claim statistics from your area in order to determine whether the rates are sufficient to cover potential payouts. Your insurance company might increase your rates if claims are more frequent and pay out more often than previously thought. In the opposite, claims that are less frequent or more costly may lead to lower renewal rates and rebates for existing policyholders. These rate changes cannot be applied to a policy at the renewal time, so a shorter term policy may allow for rate changes to occur more often.
What does a 6-month car insurance policy look like?
You will be able to choose the insurance coverages that will cover your vehicle throughout the term of your policy when you get a quote on a six-month car insurance policy. Your premium will be determined by the insurance company’s underwriting staff based on several factors such as your age, gender and driving record, insurance history, location, vehicle type, and the level of coverage that you choose. Your six-month insurance costs could be reduced depending on which discounts you are eligible for.
Your insurance company will send you a renewal offer when your policy term ends. This will include a review of your premium, which will state that your policy will be renewed for six more months at a specific rate. This rate may be lower or more than the original cost of your policy.
A 6-month auto insurance policy: pros and cons
A six-month policy of auto insurance is the most common, but there are some factors that could encourage a driver to opt for a 12-month policy. Although you might be comfortable with the semi-annual policy, an annual policy may be more cost-effective. These are some pros and cons of a six-month auto policy.
A 6 month policy on your auto insurance is a good idea.
- Flexibility in policy: A six-month auto policy tends to be more flexible because of the frequency of renewals. Savings will be much quicker if your company has reduced your rate or you have had a ticket removed from your driving record.
- You should review your insurance needs frequently. If your insurance needs are likely to change rapidly in the next few years, it may be worth reminding yourself to update your policy every six months.
- You can switch carriers sooner: While you can change auto insurance companies at any time, some carriers may charge a cancellation fee. A six-month policy allows you to change your provider if you are not satisfied with your current insurance company.
Cons of a 6-month auto policy
- Premium increases: If you buy a 12-month auto insurance policy, your premium will be locked in for a whole year. However, if you have a semi-annual policy which renews every six month, rate increases could occur sooner or later.
- You may forget your renewal dates. A 12-month policy allows you to pay once and forget about it for the rest of the year. A six-month policy might make it more difficult to remember your renewal date. You could miss a payment and lose your insurance coverage.
- You may be eligible for missed discounts. If your policy expires after six months, you could lose the discount sooner. For example, discounts for new policyholders would result in more savings than a 12-month period.
How can I tell if a 6-month policy is right?
Your unique circumstances should guide you in choosing the right type of auto policy. Your friend may be getting a great rate for their annual policy, but that does not guarantee you will receive the same rate if your policy is changed from a six-month policy. If your insurance needs are very clear, you might prefer the benefits of a longer policy term.
There are many factors that will influence the cost for car insurance. If you want to review your policy more often, or if switching carriers and you aren’t sure if the policy will suit your needs, a six-month policy might be an option. An annual policy is not a good option if you are aware that you may be facing a ticket or another traffic violation. You should also be aware that not all providers offer a 12-month or six-month policy.
Questions frequently asked
Are 6 month auto policies as good as 12 month auto policies?
Each company offers unique discounts, so premium savings can vary between policies. However, most companies offer discounts such as multi-car discounts or multi-policy discounts. This applies regardless of how long your policy has been. Discounts are usually percentage-based so your savings will depend on the percentage each company gives each discount.
Do I need to pay the 6 month policy in full or monthly?
Most insurance companies offer a variety of payment options to allow customers to make their payments according to their financial situation. A monthly payment plan may be more suitable for you if you are on a tight budget or don’t have the funds to pay the full amount. You may be able to get cheap six-month car insurance by getting discounts from certain companies if you pay in full.
Is 6 month coverage better than 12 month coverage?
The coverages that you buy when you purchase insurance offer the same protection regardless of how long the policy term lasts. If you are looking for coverage for your truck but don’t want to purchase minimum liability coverage, both policies offer the same coverage that will work in an accident. It all comes down to your personal preference regarding how flexible you would like the renewal frequency.