6-Month vs. 12-Month Auto Insurance: Which Should You Pick?
When shopping for car insurance, some companies will give you the option to have a 6-month or 12-month policy. While you might not think twice about this option, there are some benefits to each option.
Be Aware: 10 Expenses Most Likely To Drain Your Checking Account Each Month
For You: How To Get $340 Per Year in Cash Back on Gas and Other Things You Already Buy
Here are some of the reasons why it might make sense to have either a 6-month or 12-month auto insurance policy.
Advantages of a 6-Month Auto Insurance Policy
When considering a 6-month insurance policy, there are a few advantages. You’re going to have more flexibility, you’ll be able to take advantage of rate decreases earlier and you may be able to receive a discount for paying upfront.
Additional Flexibility
First, 6-month auto insurance policies provide you with more flexibility. For example, let’s assume you need to file an insurance claim, and you’re unhappy with the process. Instead of waiting up to 12 months before being able to shop around for different coverage, you can start the process much sooner.
Faster Rate Decreases
If you’ve been in an accident or received a driving ticket, there’s a chance your insurance rates have increased. These accidents and tickets usually stick around for three to five years. Once they fall off, your insurance rates will decrease. Unfortunately, most auto insurance companies won’t pass that savings along until your policy renews. If you have a six-month policy, you will realize the savings sooner.
Discounted Rates for Paying Upfront
Some insurance companies will offer discounts if you pay your premiums in advance. This doesn’t matter if you have a 6-month or 12-month policy. If paying in advance for 12 months isn’t in your budget, you can take advantage of the discount by paying six months upfront.
Advantages of a 12-Month Auto Insurance Policy
While there are advantages to having a 6-month auto insurance policy, there are also some advantages to having a 12-month policy. These include being able to budget your expenses for the entire year and delaying rate increases.
Being Able to Budget Your Expenses
Budgeting is an integral part of staying on top of your finances. By choosing a 12-month auto insurance policy, you’ll know exactly how much your premiums are for the entire year. This means less work adjusting your budget.
Delay of Potential Rate Increases
If you were at fault for a car accident, your auto insurance rates will likely increase. However, these increases typically won’t happen until your renewal date. If you have a 12-month policy, you’ll be able to avoid the surcharge for a few extra months.
More From GOBankingRates
I Was Retired, but Wasted Big Money On These 3 Things and Had To Go Back To Work
5 Reasons You Should Consider an Annuity For Your Retirement Savings
This article originally appeared on GOBankingRates.com: 6-Month vs. 12-Month Auto Insurance: Which Should You Pick?
