Should I buy a 12 month auto insurance policy or a 6 month auto insurance policy?
We have been asked many, many (many) times if there are substantial benefits to purchasing a 12 month auto insurance policy at once -vs- a 6 month policy. There can be certain advantages for each policy in either 6 month or 12 month increments as car insurance rates can change depending on several different factors, including time, so let’s get to the bottom of this right here!
Advantages to purchasing a 12-month, paid-in-full policy
- Your insurance rate will be “locked in” and cannot change (in 2013, car insurance rates increased nationwide by $153*)
- One single bill for the entire year
- You will not forget to pay mid-way through the year
- If you receive an infraction mid-way through the 12 month period, your rate won’t change during that time period. It may if you were paying every 6 months
- By paying all at once, you will likely avoid “processing fees” that your insurer must pay when charging your credit card 1x/month (that’s 12 separate transactions they have to run every year vs. just one).
Advantages to purchasing a 6-month,
- If you had an infraction that is due to be taken off your record within a year, your second 6-month premium may be less than the first 6-month premium
- Provides an opportunity to evaluate your car insurance needs. Perhaps you can find a lower rate from another provider during those first 6 months
- If you don’t have all of the money for a full year’s premium, splitting it up into a payment every 6 months is, well… better!
- Again, if you pay only twice a year, you will likely avoid “processing fees” that your insurer must pay when charging your credit card 1x/month
Advantages to paying every month (Usually only applicable if you have good credit and are considered “low risk”)
No matter your personal decision, our vote is to avoid the monthly fees and pay the 6 month or 12 months premium up front. You’ll be glad when you’re not getting charged a processing fee that adds up over time. For more information about auto insurance and home insurance rates, give us a call at 1-800-258-5101Source: www.answerfinancial.com