Purchasing a 6 or 12 Month Car Insurance Policy

Purchasing A 6 Or 12 Month Car Insurance Policy

purchasing a 6 or 12 month car insurance policy

Purchasing A 6 Or 12 Month Car Insurance Policy

It seems like an easy decision to make but for some reason you are completely unsure. You are left asking what are the benefits and drawbacks of each policy length? Insurance agents frequently get asked what’s the best option and the truth is it depends on several factors. There are advantages and disadvantages to each policy time frame. Let’s look further into this and analyze both options, so you can make a more informed decision and save some money too.

Purchasing A 6 Or 12 Month Car Insurance Policy

The Advantages of buying a 12 Month Car Policy

* Your Premium Rates are set

It may seem obvious, but you might have overlooked this simple point. Prices on almost everything from new cars and houses to shoes seem like they are constantly going up. This is also true for auto insurance pricing. With more people getting into distracted driving accidents and increased insurance fraud, many insurers have had no choice but to raise premium rates annually. The good news is you can lock in a set rate for an entire year by buying a 12 month policy. If on the other hand you buy a 6 month policy, there is a very real possibility when it’s time to renew it, you may see a rate hike for the same coverage. Another big plus for getting a longer term policy is you don’t have to worry about it for an entire year, which eliminates a little bit of stress and makes budgeting your bills easier.

* You can save by paying for 12 Months of Coverage in Advance

Almost every insurance provider offers discounts for customer that pre-pay for an entire year of coverage. The reason why insurers give price breaks by paying upfront is because they can invest that money and start growing it immediately. Insurers make a large portion of their profits from investing the premium revenue they receive into investments like stocks and bonds. If they can get the entire policy amount paid upfront, then they can put that money to work and profit from it.

* Having only 1 Yearly Bill is more Convenient

It seems life is getting more complicated by the minute. Anything that eliminates added stress is a big plus. This includes reducing the amount and frequency of bills like car insurance. Having a 12 month policy that is pre-paid will make your life a little bit easier. You won’t have to worry about choosing another insurance plan or paying that bill again for an entire year.

* You can Stop extra fees many insurers add on to short-term policies

Many people just can’t afford to pay their entire car insurance cost upfront and need to break it down into monthly payments. Most insurers have options like auto-pay that will charge someone’s credit card on a specific date or even draft the payment out of the bank account. The drawback is, there are often fees attached to making monthly premium payments that can really add up. Try to buy an entire year of coverage up front and not only will you get a discount, but avoid the fees too.

Advantages of Purchasing a 6 month Car Insurance Policy

* You can get a lower Rate Later on

It is true that auto insurance costs are going up consistently but it’s still possible to find a great deal and lower your insurance cost. If you don’t like being locked into a long-term yearly commitment, then a 6 month policy might be right for you. With direct rates online, you have an excellent chance of getting cheaper coverage when your short term 6 month policy expires.

* It’s Less of a Financial Commitment

If you are on a tight budget but have enough money to buy a 6 month policy in full, then this shorter term might be better for you. You might still get a small discount for paying in full and will not have to come up with additional money that a 12 month policy costs.

* Tickets might be Removed from Your Driving record in less than 6 months

Do you have a serious driving infraction on your DMV record that will be removed soon? If so, you might want to get a shorter 6 month policy. This makes sense because once the infraction is removed from your record, you can apply for coverage and most likely get a cheaper price. If you have cleaned up your driving record in a 6 month period then apply for coverage again and you should be able to really lower your rates quite a bit.


If you’re a good, responsible driver and have some money saved up, it makes sense to buy 12 months of coverage in advance. However, if circumstances such as driving infractions that will expire in 6 months or less allow you to get lower rates later on, you should not lock yourself into a long 12 month policy. Get a shorter 6 month policy and then apply again for lower rates if this circumstance applies to you. Whatever policy length you choose, always try and pre-pay in full so you can take advantage of discounts.

Go on-line and compare quotes from good to go insurance and see how easy it is to shop for direct car insurance. Shop around and look for auto providers like good to go insurance that offer at least a 5% discount for pre-paying the full policy amount in advance.

Mike Heuer: writer and insurance expert specializing in auto insurance

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