Six-Month vs. 12-Month Car Insurance Term: What’s Best?

You can typically buy car insurance policies with six-month or 12-month terms. Both options have advantages and drawbacks to take into account. For example, six-month car insurance policies give you a bit more flexibility, while 12-month terms help put off increasingly costly rate increases. That said, several other factors are worth considering when deciding between the two.

If you’re planning to get a new car insurance policy (or to renew your existing one) soon, here’s what to know about the differences between six- and 12-month insurance policy terms.

Key Takeaways:

• Many insurers offer both six- and 12-month car insurance policies.
• Six-month policies offer more flexibility and could save you money if you have a birthday coming up or plan to improve your credit or driving record.
• A 12-month policy may be best if you want long-term security and to lock in your premiums and discounts for longer.

Should You Buy a Six-Month Policy or a 12-Month Policy?

To determine if a six-month or 12-month policy is best for your car insurance needs, you’ll need to consider a few factors — your age, upcoming life changes, driving record and credit, and budget, to name a few. Your need for stability can also play a role, too.

The following section outlines a few scenarios in which a longer or shorter policy term may be a better choice.

You should buy a six-month policy if …

• You’re going to age out of a high-risk category. New drivers and people younger than age 25 tend to get the highest insurance rates. So if you’re turning 25 in the next few months, it’s probably a good idea to get a short-term car insurance policy so you can renew sooner and get a lower rate.
• You expect your credit or driving record to improve. If you’re working on your credit or driving record — maybe through a defensive driving course, for example — a six-month policy may be best. Improvements in both these areas can lower your premiums substantially.
• You want more flexibility. With a six-month policy, you can choose new coverages, deductibles, and other options sooner.
• You’re getting married, moving, or buying a new car. Major life events like adding drivers to your policy, changing locations, or getting a new car could all affect — and potentially lower — your premiums.

You should buy a 12-month policy if …

• You don’t want to worry about your car insurance for the next year. Annual policies give you piece of mind and ensure you have coverage for at least the next 12 months.
• You have confidence in your budget. If you know you’ll have the funds to cover the policy costs for the next 12 months, it might be worth getting a car insurance policy with an annual term.
• You want to lock in your car insurance discounts and premium for longer. Long-term policies guarantee your current costs and discounts for a longer period of time. A recent study from Insurify predicts car insurance costs will increase by 7% in 2024 after a 24% increase in 2023, so you can avoid short-term rate hikes with a 12-month policy.

Pros and cons of a six-month policy

There are both pros and cons to choosing a six-month car insurance policy. On the upside, you’ll owe less up front (if you pay in full), and you’ll have the flexibility to change your coverage or shop around for a new policy sooner. You also may enjoy lower premiums sooner, particularly if you’re turning age 25, buying a new car, or improving your credit or driving record.

The downside to short-term car insurance coverage is that you could also see potentially higher rates sooner, since a biannual policy locks in your premium and discounts for half the time of a full-year policy. You also run the chance of forgetting to renew your policy, which could leave you with a lapse in coverage — and in violation of state laws regarding minimum insurance. Most insurance companies have auto-renewing policies, but it’s worth keeping in mind.

Pros and cons of a 12-month policy

A 12-month policy has some advantages, too. For one, you get to lock in your premium and any discounts you qualify for for an entire year. This could be an advantage if insurance rates are rising in your area or you currently get a discount you might not be eligible for upon renewal (a good student discount, for example).

You also don’t have to worry about remembering to renew your policy with these longer terms, which could be beneficial if you’re at a particularly busy or hectic point in life.

One of the biggest drawbacks to an annual car insurance policy is that you don’t have the opportunity to change your coverage or premium for a longer period, which could cost you if you become eligible for new discounts or hit a lower risk level. Another factor to note: Not all car insurance companies offer 12-month policies (most default to six-month terms) so you may have to shop around more.

Is a 12-month car insurance policy cheaper?

It depends. A 12-month auto insurance policy could be more affordable, but that’s not always the case. If you’re in several at-fault accidents but your renewal isn’t up for 11 months, then it could certainly save you money in the short term, since renewing sooner would likely mean a higher premium. It could also mean losing certain discounts, though — like a good driver discount, for example.

But if you’re about to hit age 25 or you’ve improved your credit or driving record since you purchased your auto policy, waiting a full year to renew could cost you.

It all depends on your unique situation. In many cases, there’s little difference in the premium you pay between the two term lengths.

Factors That Affect Car Insurance Rates

Many factors affect your car insurance premiums, including the car you drive, how you use it, and your age.

Here’s a look at the full list of rate factors:

• Age: New drivers and people younger than age 25 tend to have the highest premiums since they’re statistically more likely to cause an accident.
• Driving record: A history of accidents and traffic violations can increase your premiums because it indicates you have a higher risk of filing a claim. A clean driving record usually equates to lower premiums.
• Gender: Women tend to have a lower risk of accidents, so they usually qualify for slightly lower car insurance premiums.
• Credit: Some insurers use your credit history to price policies, with higher credit scores getting lower premiums (and vice versa).
• Car: The age, make, and model of your car — as well as its chances of an accident or theft — are other big contributors. If you have an expensive car that would be costly to repair or replace, this can increase your premiums.
• Coverage: The more car insurance coverage you choose, the higher your premiums will be.
• Deductible: The deductible is the amount you’re responsible for paying before your insurer will pay a claim. Higher deductibles equate to lower premiums since you have less financial incentive to file a claim.
• Location: Your ZIP code and where you store and drive your vehicle also factor into your costs.

The insurance company you choose matters, too. That’s why it’s important to shop around and compare quotes from several companies when looking for a new car insurance policy.

Six- vs. 12-Month Car Insurance FAQs

If you still have lingering questions about how six- and 12-month car insurance policies differ, these answers to commonly asked questions can help shed some light.

Can you buy six months of car insurance?

Yes. Many insurers offer six-month car insurance policies. A six-month insurance policy gives you flexibility and allows you to adjust your coverage and premiums sooner than longer-term policies.

Is it better to pay car insurance every six months?

It depends. The best policy depends on many personal factors unique to you. Generally, if you expect your credit or driving record to improve in the near term, a six-month car insurance policy may be best. You also may want one if you’re reaching age 25 soon, because it could qualify you for a lower premium.

Does GEICO only do six-month policies?

No. Like many major insurance companies, GEICO offers both six- and 12-month policies. You should get quotes for both term options and see which best fits your goals and budget.

Why has your car insurance rate increased after six months?

It depends. If your car insurance rate increases once your six-month policy ends, it could be due to many potential factors. Your credit, car, driving record, age, location, and many other factors contribute to your total car insurance premium costs. Your rates could’ve increased if any of these factors changed recently, or it could have been because of inflation or other market factors.

Sources

1. Insurance Information Institute, “What Determine the Price of My Auto Insurance Policy,” accessed April 24, 2024.
2. Insurance Information Institute, “Ways to Lower Your Auto Insurance Costs,” accessed April 24, 2024.