# Policy term

> What a car insurance policy term is, how the policy period sets your coverage dates and price, and what happens at renewal or if you cancel early.

Canonical page: https://statecover-guide.com/glossary/policy-term/  
Last reviewed: October 28, 2026 by the StateCover Guide editorial team  
General information, not legal or insurance advice.

## Quick answer

The policy term, also called the policy period, is the length of time your car insurance policy is in force, from the effective date to the expiration date shown on your declarations page. Car policies are often written for six months or a year.

## How it works

The NAIC glossary defines the term as the period for which a policy is in effect. A few things follow from it:

- **Coverage dates.** You are covered for accidents that happen between the start and end dates. A crash the day after the policy expires is not covered unless the policy was renewed.
- **Price for the term.** The premium on your declarations page is the price for that term, even if you pay it in monthly installments.
- **Renewal.** At the end of the term, the insurer either offers to renew, with the price for the next term, or sends a nonrenewal notice.
- **Canceling early.** If you or the insurer cancels before the term ends, the Texas Department of Insurance explains that you are owed the unearned premium, the part you paid in advance that did not go toward coverage.

Example: you pay $600 for a six-month term and cancel after two months. With a pro rata refund, the unearned premium is $400.

## Related terms

- [Premium](https://statecover-guide.com/glossary/premium/)
- [Nonrenewal](https://statecover-guide.com/glossary/nonrenewal/)
- [Short-rate cancellation](https://statecover-guide.com/glossary/short-rate-cancellation/)
- [Declarations page](https://statecover-guide.com/glossary/declarations-page/)
- Guide: [Car insurance quotes at renewal](https://statecover-guide.com/saving/shopping-at-renewal/)

## Sources

- [NAIC, Glossary of insurance terms](https://content.naic.org/glossary-insurance-terms) — definitions of policy period and term
- [Texas Department of Insurance, Auto insurance guide](https://www.tdi.texas.gov/pubs/consumer/cb020.html) — six-month policies, cancellation, nonrenewal and unearned premium refunds