6-Month vs. 12-Month Car Insurance: Which is Better?
The ideal policy length really depends on your needs: 6-month policies provide flexibility and regular rate reviews, whereas 12-month policies give you more rate stability.
Should you buy a 6-month or 12-month car insurance policy?
Car insurance policies typically come in two durations: six months and 12 months, with six months being more common. The policy duration you choose should depend upon your unique driving history, financial situation, and personal preferences. To help you navigate this choice, we've teamed up with Nathan Foster, one of The Zebra's licensed insurance agents and a Senior Agency Trainer:
"The primary reason someone might want an annual policy is because it locks in the price for an entire year. Rates have been on the rise so it benefits customers by keeping the rate consistent for an entire year as opposed to running the risk of having your rates increase every 6 months."
Nathan Foster — Licensed insurance professional at The Zebra
While it may look good at first glance, locking in your rate is not the best option for everyone. Below, we've provided you with some guidelines to make this decision easier.
The Zebra recommends a 6-month policy if:
- Your insurer provides discounts for 6-month policies.
- You expect a driving violation to fall off your record or anticipate paying off substantial debt within the next six months.
- You appreciate the flexibility that a 6-month policy offers.
- You are a young and relatively safe driver.
- You wish to pay your insurance premiums in full but are on a budget.
The Zebra recommends a 12-month policy if:
- Your insurer offers discounts on 12-month policies.
- You have a relatively clean driving record and good credit, aiming to avoid rate increases.
- You prefer the stability and predictability of a 12-month policy.
- Budgeting for the entire year in advance suits your financial planning.
- You tend to forget important dates (i.e. your insurance renewal)
Keep in mind that some companies offer only one policy duration option. This means your choice may also be influenced by which insurers are available to you. Now, let's dive into the benefits of each policy length to help you better understand our recommendations.
Six-month auto insurance policy benefits
In 2024, an average six-month auto insurance policy costs $880. A term of six months is what you'll likely be quoted unless you specifically ask for a different policy period length. This is because six-month policies give insurers the flexibility to update rates in response to shifts in pricing trends and your driving history.Â
A six-month car insurance policy comes with two primary upsides: benefiting from positive rate revisions more quickly and greater flexibility in making policy adjustments. Read more below.
Most at-fault accidents typically stay on your record for three to five years, and insurers often won't adjust your rate until your policy ends. By going with a 6-month policy, you can often clear these penalties and enjoy lower rates faster. Â It's a smart way to put more money back in your pocket!
Other reasons your auto insurance rates might be revised downward:
- Celebrating a birthday (young drivers face expensive premiums)
- Improved credit score
- Expiration of tickets/moving violations
- Paid-off auto loan
- Telematics period ends and new behavior-based rates begin
If you’re unhappy with your current insurer but want to avoid cancellation fees or a lapse in coverage, you can simply non-renew at the end of your six-month term.
We also recommend shopping around about every six months, so this duration itself can be a good reminder to see what factors may have changed and get new quotes.
Q: But what is a rate revision?
A: A rate revision is when your insurer adjusts your premium at the end of a policy period. Insurers compare the previous year's claim payouts to their revenue and adjust prices accordingly. If the previous period resulted in a deficit, the insurance company may raise rates going forward.Â
If you have a six-month policy, you can expect this twice per year. If you've opted for a 12-month policy, you can avoid a rate revision (other than changes you've made personally) until the following year.
Benefits of an annual (12-month) auto insurance policy
Annual car insurance policies can be hard to come by, so you may need to get quotes from a regional or local provider versus a larger national company. Those who can opt for a 12-month policy may enjoy the benefits of the stability offered by such a policy, namely peace of mind, easier annual budgeting, and potential delays in rate increases, especially for those with clean records and good credit.Â
Do you have a busy schedule or often feel overwhelmed by your to-do list? An annual policy is essentially "set it and forget it," until the following year. For many people, the ease of only dealing with renewals and changes once a year is quite valuable.
As noted by Foster, "If you have a claim in the first couple of months of your [12-month] policy, your rate won't increase until the policy renews that next year [instead of 6 months]." This can be especially useful for drivers with no claims or violations in the past five years.
Prefer to budget for an entire year? Choosing an annual policy means you'll know exactly what you're paying each month.
Auto insurance premiums typically get more expensive as the years go by. Although you will most likely experience a rate revision when your policy renews each year, you can avoid a twice-annual revision by purchasing a longer 12-month policy.
Which is cheaper: 6-month car insurance or a 12-month policy?
As noted earlier, not all companies offer year-long policies, and everyone's rates are a little different. However, our analysts gathered rates (via a methodology outlined here) to compare average six and 12-month rates for a typical driver.
We always suggest that you compare quotes to find the best price and policy to meet your needs.
| Company | Avg. Annual Premium | Avg. 6 Mo. Premium |
|---|---|---|
| USAA | $434 | $217 |
| GEICO | $451 | $226 |
| State Farm | $583 | $291 |
| Nationwide | $603 | $301 |
| American Family | $665 | $332 |
| Progressive | $692 | $346 |
| Farmers | $718 | $359 |
| Allstate | $729 | $364 |
| Company | Avg. Annual Premium | Avg. 6 Mo. Premium |
|---|---|---|
| USAA | $1,365 | $683 |
| Nationwide | $1,476 | $738 |
| GEICO | $1,542 | $771 |
| American Family | $1,568 | $784 |
| State Farm | $1,569 | $785 |
| Farmers | $1,786 | $893 |
| Progressive | $1,882 | $941 |
| Allstate | $2,413 | $1,206 |
Q: Is getting a 12-month policy cheaper?
A: Not necessarily. According to Nathan, "Every carrier is a little bit different. Some might offer you a cheaper rate if you select a 12-month policy, while others might make it cheaper if you select a 6-month policy. In some instances, the prices are the same, but it isn't uncommon for prices to change when you select a 6-month vs 12-month policy."
However, if you have the funds, The Zebra always recommends asking your insurer if there is a discount for paying a year's premium in full as this can save you 4% on average.
How to keep car insurance rates low
Though the price may differ slightly based on how long your policy lasts (from more frequent increases, or possible discounts), your car insurance rate is individualized based on your driving profile. About 39% of drivers feel like they're paying too much for auto insurance, so it's helpful to understand the factors that influence your price. Here are common examples insurance companies will analyze:Â
- Age
- Driving record
- ZIP code/location
- Credit score
- Years of experience
- Gender
- Insurance/claims history
- Marital status
- Annual mileage
- Coverage level
If you want to lower your car insurance rates, focus on the factors that are within your control. Taking steps to improve your credit score, maintaining insurance (no gaps in coverage), and being safe behind the wheel is key to saving money on car insurance.
Find affordable car insurance today: compare rates.
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About The Zebra
The Zebra is not an insurance company. We publish data-backed, expert-reviewed resources to help consumers make more informed insurance decisions.
- The Zebra’s insurance content is written and reviewed for accuracy by licensed insurance agents.
- The Zebra’s insurance editorial content is not subject to review or alteration by insurance companies or partners.
- The Zebra’s editorial team operates independently of the company’s partnerships and commercialization interests, publishing unbiased information for consumer benefit.
- The auto insurance rates published on The Zebra’s pages are based on a comprehensive analysis of car insurance pricing data, evaluating more than 83 million insurance rates from across the United States.