Finding ways to save money on auto insurance can be difficult. One way is to have a 12-month auto insurance policy, which lets you lock in the rate for an insurance premium for a year. Such policies, while not necessarily becoming extinct, can be harder to find than 6-month policies. Though any national chain insurance companies don’t offer 12-month car insurance policies any longer, it's still possible to find them out there. So if you're shopping for auto insurance quotes and need to choose between a 12-month and 6-month policy, here's what you should consider.

6 Month vs 12 Month Car Insurance Policies

6 Month Auto Insurance Policy

Insurance carriers tend to prefer 6-month auto insurance policies. There are several reasons for this, including rating accuracy and pricing. Shorter policies allow insurers greater control over pricing, which allows them to better assess risk and lose less money. However, just because insurance companies tend to prefer a 6-month policies, that doesn't necessarily mean it's a bad thing for you as the consumer.

The main benefit of shorter policies to an insurance company is that shorter terms allow insurers to respond more quickly to pricing mistakes and unexpected claims, such as from a hurricane that causes water damage to thousands of cars that the insurer rated long before the hurricane hit. This also applies to your risk as a driver, as well. If you cause an accident a few weeks into your six-month policy, the insurer must honor your existing policy for five months or however long until it ends at its current price, since an insurer can’t raise rates during the middle of a policy term, even if you get a ticket or have an accident. Having the option to raise rates every six months is preferable than once a year, at least to an insurance company.

Also, a 12-month policy allows only one time per year to increase rates, which an insurer may deem necessary with new customers who it mispriced in the first place, says Justin Wadsworth, insurance business manager at Insurance.rateGenius.com.

A six-month policy allows rates to be raised twice a year. And even if rate increases for both policies add up to the same amount in a year, the carrier is getting six months of a partial increase before it normally would with a 12-month policy. The insurance company gets to hold on to that rate increase longer with a six-month term. That may not sound like much money for one policyholder. But an insurer raising rates $10 every six months could have millions of more dollars in the bank for six months than if it raised rates $20 after 12 months.

There are benefits to 6-month policies for consumers as well. First, a 6-month policy is cheaper to pay in full, and by paying for your policy in full you'll likley get a discount on your insurance premium. Second, 6-month policies give consumers more opportunities to shop around for comparison quotes. With a 6-month policy, you're not tied to an insurer as long, particularly if you have a bad experience with the company.

12 Month Auto Insurance Policy

There’s really no downside for consumers to a 12-month policy. If they find a better price elsewhere, they can switch insurance carriers during the policy term and receive a check that’s prorated to the term left on their policy. Still, a 12-month policy can benefit the policyholder and the insurer by locking in a rate for 12 months that will hopefully keep the driver as a customer for a year. While drivers can change insurance policies at any time, they may be less likely to shop around for a new policy if they have a 12-month policy. Instead of shopping twice a year with a six-month policy, they’re only shopping once a year.

12-month policies are less common and are typically offered by companies that are highly rated for better drivers, says Lisa Radov, owner of Gebco Insurance Associates in Maryland. There are exceptions, Radov says, such as the Maryland Automobile Insurance Fund that offers 12-month policies and caters to high-risk drivers.

State regulations may also require 12-month options. In 2008, Progressive Insurance was accused by the Massachusetts Association of Insurance Agents of not offering 12-month policies. Progressive rebutted that its standard policy is six months, but regulations in Massachusetts requires that 12-month policies be available.

Progressive is shifting to 12-month policies for its preferred customers, Wadsworth says, a move that could help keep those customers from shopping more than once a year. “Ordinarily, people don’t want to think about their insurance more than they have to,” he says. “If they can lock in a price for 12 months, it’s better for them.” A shorter term is also more work for the carrier, including retaining customers, he says.

You may not get a choice

Even if your carrier offers 12- and six-month policies, you may not have a choice. Your driving record, credit history, insurance score reports and other data may be evaluated before you’re offered the 12-month term you’re seeking.

Any points against you in these areas, such as a poor credit score, could force you into a six-month policy. If your poor credit history predicts your future, as far as insurance ratings go, your insurer may want the option of increasing your rates after six months if something happens such as you get a few speeding tickets. Insurers may also charge more for 12-month premiums because they know they’re stuck with that rate for 12 months.

Whether you're looking for a 12-month or 6-month auto insurance policy, let us help you shop and save. Call an insurance advisor now at (844) 300-3364!

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Aaron Crowe is a freelance journalist who covers insurance and personal finance for a variety of websites, including his website CashSmarter.com.