When shopping for an auto insurance policy you'll find that most car insurance companies offer six-month policies instead of 12-month policies. Why do auto insurers prefer six-month policies?
The main reason that the majority of car insurance carriers offer motorists six-month policies is that it allows the insurers to reassess risk and review drivers' rates without waiting a full year.
By offering six-month policies, car insurance companies have the flexibility to update your information twice a year instead of just once and adjust rates accordingly each time if need be.
Life changes affect your car insurances, as do other situations that can easily occur in a six-month period -- such as traffic violations or auto accidents. Some of these events will raise your premium, while others can lower your car insurance rates, and insurers want to know about all of them.
An accident, a ticket or multiple of either will normally raise your rates. But, on the flip side if a ticket or accident falls off your driving record, then your rates may be lowered since a surcharge may be removed.
A new job or retirement can change your auto insurance rates, but is something you may neglect to inform your insurer about.
If your commute is longer, then there is more of a chance for you to be in an accident and increase your premium. Retiring and putting fewer miles on your vehicle could save you money with a low-mileage discount.
Having just one life event in a six-month period could affect your rates, but you could easily have several occur. Having a shorter policy period allows insurers to pull reports and make certain the driver's profile and vehicle information is accurate and that its assessment of the policy risk is still correct.
More risk will typically find motorists paying more at their renewal period, or being non-renewed if the risk is found to be too high by the company's standards. Less risk can lower your auto insurance premium by the removal of a surcharge, a discount being offered or lower base rates.
If you want a 12-month policy, then you'll have to search around for low-cost car insurance companies that offer it.
Companies that offer a full year policy usually do so for drivers who have shown to pose less of a risk and who the company feels more comfortable about pulling reports on just once a year. This would be motorists with good credit, a good driving record and continuous coverage with the same insurer for at least a few years.
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