How Long Does It Take for Your Auto Insurance Policy to Expire?

How Long Does It Take for Your Auto Insurance Policy to Expire

Auto insurance policy is essential if your state deems it necessary. However, there are specific time limits to your auto insurance coverage, and it depends on what term you choose when buying auto insurance. Keeping an eye on your auto insurance policy’s endurance should be a priority when selecting an insurance policy for your vehicle.

Usually, insurance companies offer two terms; 6-month and 12-month. You have the freedom to choose whatever term fits your criteria. Both of these terms have some merits and demerits. Therefore, comprehending the risks and benefits each term proposes is vital for making the best decision. 

This article will shed light on what auto insurance terms are and what merits and demerits they offer. 

Auto Insurance Term Defined

You can define auto insurance term as a time limit your package has until it reaches its expiry. In other words, the auto insurance term is the measure of the life of your insurance policy. Auto insurance terms hold a lot of importance as your policy’s price and the coverage it offers depend upon how long the policy lasts. 

Once you choose a specific term, the company cannot alter the policy’s coverage or price until it reaches its endpoint. Auto insurance terms are a means of keeping you safe from insurance fraud; for instance, you meet an accident just after you get a policy, you will not be charged a penny more than what you have already paid per month in your 12-months term. Short terms have more chances of getting underwritten as compared to long ones. 

Merits of the Six-Month Term

Opting for the six-month term may be risky, but it bears a few advantages as well. They are the most chosen category in the auto insurance arena. Many insurance companies recommend six months to their payees as it allows them to make alterations in your premium according to the history of your vehicle’s unfortunate events. 

Choosing a six-month term means you are giving the company the benefit of changing your premium within six months if you are involved in frequent blunders.

However, the six-month term isn’t just a bundle of disadvantages that will drain your bank account; some merits make a six-month term an ideal choice for many buyers. The merits are as follows:

  • A six-month term may cost less if your insurance company charges a fee on a lump-sum basis instead of monthly. 
  • It is possible in the six-month term that the company will reduce your premium if you get into fewer accidents.
  • You can change your insurance company after six months if it doesn’t seem suitable to you. 

Demerits of the Six-Month Term

The six-month policy may have some advantages, but the disadvantages it brings are too risky to opt for this term. Some of the demerits are:

  • If you often find yourself in an accident or moving violation, the company increases the premium soon.
  • Auto insurance companies may ask for a policy fee at the end of six-months instead of monthly. 
  • You get a shorter coverage period this way; the company can ban you from getting coverage next time. 

Merits of the 12-Month Term

  • Unlike a six-month term, in a 12-month term, the company won’t increase your premium until the 12 months are over.
  • In a 12-month term, you will get coverage for a longer period as compared to a six-month term. 
  • Furthermore, if you are prone to accidents, you will have considerable time to prepare for the premium raise. 

Demerits of the 12-Month Term

  • You will have to wait for 12-months— even if your track record improves— to avail lower rates. 

Conclusively, keeping the advantages and disadvantages of each term in mind is vital before purchasing a policy to find your automobile’s best insurance plan. These merits and demerits will help you decide what term is best for you and how it benefits you.