Auto Insurance: Which is better 6 month or 12 month policy term?

When you sign up for car insurance, you may be offered the option of a six month or annual (12 month term) policy.  A few years ago there were a few carriers that only offered six month auto insurance policy terms.   That would leave homeowners or clients who purchased an annual renters policy, renewing their auto policy at six month intervals while their homeowners or renters policy were set for the year.

In my experience, it it better to have an annual (12 month term) auto policy rather than a six month policy for several reasons:

  • Billing on your home and auto policy are able to be taken out of your account at the same time
  • You don’t have to worry about reviewing or going over insurance policies more than once a year
  • You wont be “re-rated” every six months thereby locking in your current rate for the year

The benefits of not being re-rated every six months versus once a year include:

  • If there are rate hikes in your area (city, neighborhood, zip code) it may take longer to show up on your policy depending on when those rate hikes went into effect
  • If you’ve had recent claims or losses, it may take longer to show up on your policy in the form of increased premium.
  • You will only be re-rated every year rather than every six months upon renewal if the carrier you are with re-rates you upon renewal.

Typically the cost of purchasing an annual versus a six month auto policy is about the same because your rate is either based on a six month premium divided by six or a 12 month premium divided by 12, when paying monthly.

On another note, if your finances permit, paying your policy in full for the year will typically save you anywhere from $150 to $250 a year, depending on your full premium.  If you’d like an auto insurance quote, and you live in Ohio, give us a call 614-642-0941.

Serving: Columbus, Pickerington, Central Ohio, Delaware County Ohio and surrounding areas

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