FREE Car Insurance Comparison

Currently insured?

Free Car Insurance Comparison

Compare Quotes from Top Companies and Save

Currently insured?

How long does my car insurance last?

certain amount of time that I need SR22 car insurance

Here's what you need to know...

  • A Personal Auto Policy (PAP) is a contract that lasts for either a 6-month or a 12-month term
  • During the term, the insurance company must honor the rates that were quoted after the application was fully underwritten even if there’s an accident or a violation
  • As long as you don’t violate the terms of your contract and you make all of your payments, you’ll have coverage up until your term ends
  • When an auto insurance term approaches renewal, it will be fully underwritten and your new rates will be calculated
  • If you’d like to renew your policy and the insurance company extends that offer, you can submit payment and continue your coverage

When you get an auto insurance quote for the first time, you’re so focused on hearing a monthly payment figure that you don’t really consider how long the rate will last. Typically, the number that you’ll hear represents how much the coverage that you selected will cost for the entire term.

After you review that number, you can ask for a breakdown that calculates what that number would equate to if you were to pay monthly, quarterly or semi-annually. Compare car insurance rates now by using our FREE tool above!

Not all insurance companies offer the same term lengths. Consumers can generally find both 6-month and 12-month terms while shopping the market, with 6-month products being the most popular.

Even though terms will only last for up to 1 year, that doesn’t mean that’s how long your insurance with the carrier will last. Find out why policy terms are so important, which term is best, and how to extend your coverage if you don’t want to switch insurers.

What is a car insurance term?

When you select a car insurance policy, the term is simply the was to say how long the policy will last. If you’re looking at a quote or a policy declaration’s page, you can find out how long the term is by reviewing the effective date and expiration date of the policy. Some policies might even have a section that defines whether you’re being quoted for a 6-month or 12-month product.

What’s the difference between a 6-month and 12-month term?

days of a calendar_60115764-1600x1600

The primary difference between 6-month and 12-month terms is how often the policies are underwritten. When a policyholder applies for coverage with a carrier, the carrier will review all of the information provided to ensure that the person painted an accurate picture of their driving habits and history.

As long as everything checks out, the company will issue the policy at the rate that was quoted. After rates are made and the policy has been issued, the rate per unit of insurance that the policyholder carries will remain the same for the entire term.

The carrier cannot change the base rate that’s being charged during that term until the renewal comes.

Why do most insurance companies offer 6-month terms?

A majority of insurers will sell policies in 6-month increments. This is because a 6-month term benefits an insurer more than it benefits the policyholder. While the insurer does have to process paperwork and review policies twice as often, there’s more potential for profits. Here are some of the advantages of 6-month policies:

  • Insurers can run your driving record every 6 months to look for violations
  • Insurers can charge for at-fault claims sooner after a loss
  • Insurers can set up a non-renewal sooner when they no longer want to take on a risk
  • Insurers can re-run credit-based insurance scores
  • Insurers are more likely to collect full payments so they can reduce administrative operation expenses

Free Car Insurance Comparison

Compare Quotes From Top Companies and Save

Currently insured?

What are some of the advantages of a 12-month policy?

Consumers can still find stockholder-run policies that last for a duration of 12 months. While they are few and far between, it’s worth looking for the annual option if you’re looking for long-term affordability.

In a world where it feels like rates are going up regularly, having a 12-month policy ensures that you can lock in your rates for a year.

It’s also beneficial to know that you’ll have at least a year to save up for increased rates after you’ve had an accident or you’ve been convicted of a moving violation. Since you have more time paying the fixed rates you’ve been quoted, you’ll even have extra time to shop around to see if you’re able to find a more competitive rate when your renewal comes.

Exceptions to Standard Rules

If you don’t need auto insurance coverage for an entire term, it’s possible that you can find a short-term policy that doesn’t last 6 or 12 months. These specialty policies are called short-term or temporary products.

They can be purchased through a specialty provider and can range in premium based on your risk class. In most cases, short-term policies provide only liability coverage and last for up to 30 days.

Will your policy automatically end at the end of your term?

If you have a standard term, the coverage won’t just end on the expiration date. Instead, about 45 days before your policy is set to expire, the company will reassess the risk by running accident reports, credit reports, and driving records.

After the risk has been assessed again, the company can decide if they would like to keep you as a client. They can also decide to raise your rates or lower them if you fall into a new risk class. This can be beneficial if it has been 3 years and an accident or ticket surcharge has fallen off of your record.

What happens if your record is too risky?

AdobeStock_75961762-1600x1600

If you aren’t eligible for coverage because of your driving record or new drivers in the home, the company will send you a non-renewal notice. In most states you’re required to get this at least 30 days before your coverage will expire. This gives you ample time to find a provider that is willing to insure you.

Will the policy automatically renew?

Every company has their own automatic renewal procedures. If you have an automatic payment set up, be sure to review your new rates so that you can cancel your coverage before the payment draft. If you don’t have this EFT payment set up, you have to physically pay the payment for the policy to continue.

When a policy isn’t paid on the renewal date, the policy will cancel and no coverage will be afforded.

It’s very important to review your renewal as it approaches. See if there are errors on your policy and correct them if need be. If you’re still not happy with the rate that you’re being quoted, it’s best to shop around to see how much other carriers will charge you for the same coverage.

To save time, you can use an online brokerage-style tool to compare rates with several companies all at once. By entering your information in this free tool, you can compare instant car quotes and decide which carrier deserves your business the most. Enter your zip code in our FREE tool below to compare car insurance rates now!

No tags for this post.

Copyright © 2018 · All Rights Reserved · Car Insurance Comparison · Terms & Conditions · About Us · Privacy Policy · Contact Us · Site Map · Resources

Currently insured?