Although it seems easy to make, you’re not sure. It is natural to wonder what the advantages and disadvantages of each policy length are. Insurance agents are often asked which policy is best. The truth is that it depends on many factors. Each policy time period has its advantages and disadvantages. Let’s take a closer look at each option and compare them so that you can make an informed decision and also save money.
The Benefits of a 12-Month Car Policy
* The premium rates you will pay are determined
This may seem obvious but it could be that you haven’t noticed this important point. Prices for everything, from houses and cars to shoes, seem to be increasing. The same holds true for auto insurance pricing. Many insurers are forced to increase their premium rates every year due to increased insurance fraud and distracted driving. A 12-month policy can lock you in at a fixed rate for a whole year. A 6 month policy will have a higher rate, so it is possible to get a lower rate when you renew your policy. A longer-term policy has the advantage that you won’t need to worry about it for a year. This reduces stress and helps with budgeting.
* 12 Months of coverage can be purchased in advance to save money
Pre-paying for an entire year of insurance coverage will get you discounts from almost every insurance company. Insurers offer price breaks for customers who pre-pay upfront. This is because they have the ability to invest that money immediately and grow it. The majority of the profits that insurers make from premium revenue are invested in investments such as stocks and bonds. They can make a profit if they are able to pay the full policy amount upfront.
* A 1-yearly bill is easier
It seems like life is becoming more complicated every day. Any way to reduce stress is a plus. This includes reducing the frequency and amount of bills such as car insurance. Pre-paid 12 month policies will make your life easier. Pre-paid policies are easy to use and you won’t need to worry about switching insurance plans or paying the bill for the entire year.
* You can stop paying extra fees that some insurers charge for short-term policies
Many people can’t afford the full cost of their car insurance upfront. They need to split it into monthly payments. Many insurers offer auto-pay, which charges a credit card or drafts the payment from a bank account. There are fees associated with making monthly premium payments. This can add up quickly. You can save money by purchasing a whole year of coverage upfront.
The Advantages of Purchasing 6 Months Car Insurance Policy
* Later, you can get a lower rate
Although auto insurance prices are rising steadily, it is still possible to get a great deal on your policy and lower your premiums. A 6 month policy may be the right choice for you if you don’t want to commit to a long-term commitment. Direct rates online offer a great opportunity to get cheaper coverage after your 6 month policy ends.
* You need less of a financial commitment
This shorter term may be more suitable for those with tight budgets who have the money to purchase a full 6 month policy. While you might not get the same discount for paying in full, you won’t have to pay any additional money than a 12-month policy.
* In less than six months, tickets may be removed from your driving record
Are you facing a DMV infraction that could result in your record being revoked? You might consider a shorter policy of 6 months if you have a serious driving infraction on your DMV record. This is because you can still apply for coverage once the infraction has been removed from your record. You will most likely receive a lower price. You should have your driving record clean within 6 months. If that happens, you can apply again for coverage and your rates will likely drop quite a bit.
Conclusion
It’s a smart idea to purchase 12 months of insurance in advance if you are a responsible driver with some savings. If driving infractions expire within 6 months or less, it is a good idea to not commit to a 12-month policy. If this is the case, you can get a shorter policy for 6 months and then apply again to lower rates. No matter what policy length you choose to take, it is important that you pre-pay your entire amount in order to receive discounts.