Why Are Car Insurance Policies 6 Months Long?

Last Updated on December 5, 2025

Most car insurance policies renew every 6 or 12 months. But why are 6-month policies so common? Why have many major insurers moved away from 12-month terms? And which option is better for your wallet?

Below, we break down why many insurers prefer 6-month auto insurance policies—and whether you should choose a 6-month or 12-month term.

Key Takeaways

• 6-month policies allow insurers to adjust rates more frequently based on updated data.
• 12-month policies are typically better for consumers because they lock in pricing longer.
• Many major insurers now offer only 6-month terms, especially for new or higher-risk customers.
• If possible, choose the 12-month policy for more stability and potentially lower rates.

6-Month Versus 12-Month Policies: Which One Should You Choose?

Insurance companies traditionally offered 12-month auto insurance policies. Today, however, more and more insurers offer only 6-month policies. Some still offer both, but many restrict 12-month terms to long-standing, low-risk customers.

Generally speaking, a 12-month auto insurance policy is the better deal for drivers because:

• You lock in your rate for a full year.
• Your price won’t change for 12 months—even if industry rates rise.
• Your budget becomes more predictable.

If your insurer only offers 6-month terms, you may experience more frequent pricing changes. That’s because insurers reassess your risk every time you renew.

Why Some Insurers Only Offer 6-Month Policies

More insurers—including big names like State Farm and Allstate—now offer 6-month policies as their standard term. There are two main reasons for this shift:

1. Insurers Can Adjust Rates More Frequently

Insurance companies constantly analyze data: accident trends, claim costs, repair prices, medical expenses, theft rates, weather impacts, and customer demographics. Because the industry changes quickly, insurers prefer the flexibility of adjusting premiums every six months.

For example:

• If claim costs spike, insurers can raise rates sooner.
• If your risk profile changes (e.g., you receive a speeding ticket), your new rate takes effect faster.

Across millions of policies, even a small increase—say $5 per policy—can mean millions in additional revenue for the company. A 6-month term allows these adjustments to happen twice as often as a 12-month term.

2. More Frequent Individual Pricing Adjustments

Auto insurance companies cannot change your premium mid-policy unless you make a policy change (such as adding a vehicle or driver). So, if you’re on a 12-month term and get a ticket after one week, the insurer must wait nearly a year to adjust your pricing.

With a 6-month policy, insurers can “recalculate” your rate twice as often, ensuring your premium reflects the most recent data.

Why 12-Month Terms Are Typically Preferred by Drivers

Insurance rates usually go up over time—not down. Prices increase due to repair cost inflation, rising medical expenses, higher claim frequency, and other market factors. That’s why 12-month policies are typically better for consumers.

Benefits of 12-month terms include:

• Locked-in pricing: You’re protected from mid-year rate hikes.
• Greater stability: You won’t face price surprises every six months.
• Better budgeting: Annual premiums are easier to plan around.

Unfortunately, as insurers continue shifting toward faster pricing cycles, fewer companies offer true 12-month terms—especially for new or higher-risk customers.

When You Might Need a 6-Month Policy Anyway

You may be limited to 6-month terms if:

• Your insurer doesn’t offer 12-month policies at all
• You’re a new customer
• You’re considered higher risk
• You’ve had recent claims, violations, or lapses in coverage

Even if you prefer a 12-month policy, your insurer may require you to “earn” it through consistent, claim-free driving and on-time payments.

FAQs

The Bottom Line

Car insurance policies are often 6 months long because they give insurers more flexibility to update rates based on evolving risk and market conditions. While 6-month policies primarily benefit insurance companies, a 12-month policy—when available—generally offers better savings and stability for drivers.

When possible, choose the 12-month term. But if 6-month policies are your only option, make sure you shop around and compare rates regularly to avoid overpaying.