Semiannual Auto Insurance Policies Are Normally Better.

by Edward Snaneh, Illinois Car Insurance Rates Expert in Chicago
Insurance Navy, 300 N LaSalle St Ste 4925, Chicago, IL 60654

Clients normally wonder of which is better for them, annual policies or semiannual auto insurance policies. There is no exact and specific answer to this question, however there are certain factors that clients need to be aware of when deciding as if they want to purchase a yearly policy or semiannual policy.

Generally speaking, semiannual policies are better for customers. The following factors need to be considered, though, when taking a decision about this choice.

1. Most auto insurance companies in Chicago Illinois offer 'auto insurance renewal discounts' and 'auto insurance transfer discounts' on the expiration date of the policy. This means that annual policies get this discounts after 12 months, while semiannual auto insurance policies get the discount sooner, after 6 months from the inception date of the policy.

2. For plans that charge car insurance policy fees, interest, and finance fees the amount of extra monthly charges may be higher for annual car coverage contracts. This is very true for policies with initial annual unpaid balance of over $1,000 ($500 semiannual).  This is due to the structure of the premium payment schedules allowed by law, and to the fact that, generally speaking, the unpaid balances is spread over longer periods of time in the annual policies.

3. For comprehensive and collision coverage the premium imposed by most insurance companies is based on the actual cash value (known as ACV) of the vehicle. The actual cash value of the vehicle the value of the car after depreciation.  Most insurers use specialized 'red books' to determine the ACV to be used to charge customers premiums for comprehensive and collision.  The ACV of the vehicles change periodically, perhaps 3 or 4 times a year, for lower amount most of the time. In other words, your car after 6 months is less than now, which means that your comprehensive and collision will go down after 6 months (for semiannual policies) and after 12 months for annual policies.

4. Convenience.  People who like to pay off their car insurance premiums all at once may find it easier to go with 6 months policies because the premium is typically smaller than that of 12 months policies.

5. Certain companies may not allow semiannual policies for contracts that require financial responsibility filing known as SR22 insurance in Illinois.  Most clients who seek SR22 insurance policies have no choice but to get annual policies.

It is clear that semiannual policies may be the best choice for most people. However if you, the client seeking insurance, think that annual policies are better for you then ask you agent for his or her professional advice.  Most agents are motivated to sell yearly policies because its longer commitment on the customer's side.
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