Auto Insurance: Six-Month Policy Terms

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Why do some car insurance companies only write six-month policies?

Auto Insurance: Six-Month Policy Terms

Auto insurance companies incur less risk if they insure drivers every six months. After the six-month period, the car insurance company is able to re-evaluate the driver's record and either increase or decrease the existing premium to reflect the driver's probability of having an accident or moving violation.

If an auto insurance company does write a 12-month policy, the premiums will be higher, since the company is taking a greater risk of locking into a rate for the entire year.

   

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