Glossary

Policy period

The span of time a car insurance policy is in force, usually six or 12 months, from its effective date to its expiration date.

Also called: policy term, coverage period

The policy period is the stretch of time your coverage is in effect, from the effective date and time to the expiration date and time shown on your declarations page. Most auto policies run for six or 12 months. A standard personal auto policy covers accidents and losses that happen during the policy period and within the policy territory, generally the U.S., its territories and Canada.

The period sets how the premium is quoted and refunded. Your price is generally fixed for the term, and the insurer changes it at policy renewal, when a new period begins. Example: a six-month policy starts March 1 at 12:01 a.m. and expires September 1 at 12:01 a.m. If you cancel on June 1, you have used half the period, and a pro rata refund would return half the premium (hypothetical dates and figures). Six-month terms let insurers re-rate you more often, for better or worse; 12-month terms hold the price longer.

The exact time matters when you switch insurers. Line up the new policy's start with the old one's end so there is no gap, and keep the old policy until the new one is confirmed. Even a one-day gap can count as a lapse. See how to switch car insurance without a gap.

Last reviewed October 4, 2026

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Related terms

Policy renewal The start of a new policy term with the same insurer when the current one expires, often with an updated price and terms. Declarations page The summary page of an auto policy listing who and what is insured, the coverages, limits, deductibles, premium and policy period. Premium The amount you pay for an insurance policy over its term, built from the insurer's rate, your rating factors, coverage choices and discounts. Policy cancellation Ending an insurance policy before its term is over, either by you or by the insurer, as opposed to letting it expire or not renew. Grace period Extra time after a missed premium due date, or after buying a car, during which coverage continues before a lapse or a reporting deadline. Insurance binder A temporary written agreement that puts coverage in force immediately while the insurer finishes issuing the formal policy.

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