12-Month Car Insurance: Pros and Cons

What are the benefits of an annual car insurance policy?

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Can you buy a 12-month car insurance policy?

Although most car insurance policies last for six months, some companies offer 12-month policies. In theory, a 12-month policy secures your rate and keeps your insurer from raising your premium for an entire year. Whether or not this is a good car insurance policy for you depends on your driving record, personal details, and your insurer.

Understanding 12-month auto insurance policies
  1. Benefits of car insurance for 12 months
  2. Costs of 12-month car insurance
  3. Additional resources

12-month car insurance: benefits and cheapest companies

The primary benefit of a 12-month car insurance policy is that your rate is locked for an entire year. If you’ve had a standard six-month car insurance policy before, you may have endured a rate increase when your policy renewed. Your premium can increase if you were involved in a collision, added a vehicle or driver to your policy, or if you were affected by a routine rate revision.

Rate revisions occur when an insurance company analyzes its rates and re-prices its premiums. If your insurance company paid out more in claims than it earned in revenue during the previous six months, it could result in higher premiums to offset this deficit.

The benefit of a 12-month policy term is the relative infrequency of rate revisions. Six-month policies result in rate revisions twice each year. However, less frequent policy renewals could be a negative, depending on your situation.

In nearly all other aspects, a 12-month policy is the same as a six-month contract. You still pay a down payment, must meet your state's required coverage level, and pay your bill on time.

How much does a 12-month auto insurance policy cost?
Twelve-month policies are uncommon. If you’re insured by a car insurance company that sells yearlong policies, they might not be available to you based on your location or driving profile. Below are esetimated prices for 12-month car insurance policies from leading insurers.

InsurerAverage Annual Premium
The General$3,739
Kemper Specialty$3,395

The above rates are averages. Depending on your exact location and driving record, your premium can change. Below, see what these premiums would cost on a monthly basis.

InsurerAverage Monthly Premium
The General$312
Kemper Specialty$283

Should you buy an annual car insurance policy?

Now that we’ve explained the potential benefits of a 12-month auto insurance policy, let’s assess whether it's a good idea for you. What are the downsides of locking in your rate for 12 months?

12-month policies are difficult to find

Most major insurance companies do not offer annual auto policies. Six-month policies are the standard in the insurance world, as they allow insurance companies to recalculate rates more often. Some popular companies might offer 12-month policies via their legacy policies, but it is difficult to find a brand new policy for this duration.

Your rates are locked in for a year

This is both a benefit and cost of an annual insurance policy. Car insurance companies use a number of rating factors to determine how your premiums change. Most companies will continue to charge you after an at-fault accident for three to five years. Even if your violation penalty period expires in the middle of your policy, your insurance company won't remove this violation from your premium until your term is over.

In this scenario, you'd end up paying more because of your lengthy policy. You could contact your insurance company and ask them to “re-pull” your rate in order for the violation to no longer be counted on your current policy, but that might not always work.

An accident falling off your insurance record is only one example. Below are common personal attributes that can impact your premium if and when they change.

  • You celebrate a birthday
  • Your credit score changes
  • A speeding ticket expires
  • You pay off a vehicle loan

Compare rates from top insurance companies today!

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Additional resources

If you’re looking for more information, including our user methodology, see our additional resources below.

What is covered by a bodily injury liability coverage?
What’s the best deductible for me?
Understanding your homeowners insurance
6-month car insurance
Temporary car insurance
Methodology: how we get our rates