Best Answer

It all has to do with what insurance is. Insurance is the transference of risk. You pay a premium to the insurance company, it turn they agree to indemnify you, or put you back to the financial status you were previously at prior to a claim within the limits you have selected. In simple terms you hit someone and owe for damage to his car, his injuries, damage to you car, and your injuries. Assuming you have all the coverages needed at the limits needed the insurance company pays for all this so you are now at the same place financially you were prior to the accident. That being said the, money you pay in premium is for the possibility of a future claim, not claims already paid. This insurance company must predict how much money will be paid on average for the next policy term for a pool of risk. It's like selling a product without knowing how much it will cost you to produce until after you have already sold it. Knowing this, it's amazing insurance companies know how much to charge. Charge too much and you'll lose customers to more competitive companies. Charge too little and you loose the company. You have to be as accurate as possible. This is why no insurance company should want to charge too much or too little. Auto insurance is so dynamic that it is almost impossible to predict more than six months in the future how much will be paid in claims. Variables such as people moving from one place to another, explosions in popularity of more destructive vehicles like SUVs, changes in driving habits like driving while talking on cell phones, and changes in jury awards are all variables that usually cannot be accounted for until the last minute. Further hindering insurance companies is the fact most states mandate that any rate change, up or down, must be approved through a lengthy government bureaucracy. This will slow down the process of charging the appropriate rates for the risk when time is crucial. This is why you will find that most insurance companies will offer only six month policies for autos. If you think it's all about insurance companies wanting to charge more every six month, then why are home owner's policies usually a twelve month policy?

In short, the companies want to be able to adjust their rates.

That can work in your favor also. Consider: An insurance company in most states can only charge for a conviction (a ticket) for 36 months from the conviction date (the date you paid it, or went to court.) However, the insurance company is not required nor is it even expected to stop charging for a ticket in the middle of a policy period. So if you got a ticket on 12/1/02 you would expect the reduced rates to come around 12/1/05. However, if your policy renews on 11/15/05 then if you have an annual policy you won't actually see the reduced rates until 11/15/06.

User Avatar

Wiki User

โˆ™ 2014-04-17 00:02:29
This answer is:
User Avatar
Study guides


21 cards

Im with someone in the army and we want to get married asap but would he get into trouble he is 21 and im 16

What does teachorous mean

What is the first aid treatment for arterial bleeding

What is the difference between an intentional and unintentional injury

See all cards
53 Reviews

Add your answer:

Earn +20 pts
Q: Why do some car insurance companies only write six month policies?
Write your answer...
Still have questions?
magnify glass
Related questions

How do you obtain license to write insurance policies in Georgia?

You can take an insurance agents test for various insurance companies in order to write policies in Georgia or anywhere else. It is fairly easy to obtain a license after you pass the exams.

Which companies sell insurance for people who live in apartments?

Most Property & Casualty insurance companies that write Homeowners Insurance will also sell Tenant Insurance policies. Simply call your local insurance agent to inquire.

Which national carrier provides classic car insurance quotes?

What surprises most people is that most insurance companies that write policies also write for classic car. Some companies are Allstate, Nationwide and State Farm.

What insurance companies or agents or brokers write insurance for corporate owned motorcycles?

Most ins. companies are trying to phase out writing ANY bike policies. If you are having trouble, contact the state insurance board and ask. There HAS to be some that do.

Where can I go in Texas to get some temporary insurance for six months?

Any licensed car insurance company can write a policy for you. Most companies only write car insurance policies for 6 months so that should be easy to find.

Can you write your own life insurance policy as a life insurance agent?

Yes you can. As an agent, you are allowed to write your own policies.

When was NJ Cure Insurance founded?

CURE Insurance was founded in New Jersey in the 1980's when larger insurance companies were not willing to write many car insurance policies. They are a non-profit agency, and this helps them keep rates low.

Which insurance companies cover semi trucks?

There are many companies that write insurance for semi trucks. Some of these companies are Progressive Commercial and Geico.

What can you do about dog breed discrimination among home owners insurance companies?

Get rid of your pit bull. (Or Rotties) There is nothing you can do . . . the insurance companies are in business to make money, not to give their money away. It is known that of all dogs that have killed people, pits are responsible for about 67% of those deaths. An insurance company would be crazy to insure someone who owns a pit. Overall across America, they would lose money. When insurance companies write insurance policies, they have to do so on the basis that they won't even have to pay out on the vast majority of policies sold.

How much does it cost to insure a bowling alley?

Insurance for a bowling center will vary depending on type of insurance and other factors, such as location, size, age, equipment, etc. There are insurance companies that focus on bowling centers or specifically write policies for centers.

Where can a person go to compare the best life insurance policy with others?

One of the ways a person can compare life insurance policies is to write to different companies and request information. Once you have that information you can compare them and see which is best for you.

Do you need to get an umbrella policy from the same insurance company that covers your car and home insurance?

Yes. Most companies that offer umbrella or excess liability policies will not offer such a policy unless they also insure your home and or vehicles. The reason for this is that under the policy you are required to carry policies on your home and vehicles but are required to carry certain limits of liability on these policies. It s much easier for the company to monitor these policies and required limits if they handle these policies. There are some companies that will write these separately but the prices are much higher under these circumstances.

People also asked