12-month car insurance: pros and cons
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 car insurance rates 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 insurance company.
Which insurance companies offer 12-month policies?
While we’ll get to the reasons you might want a 12-month car insurance policy, let’s assess the companies that actually offer these policies. Twelve-month car insurance policies are not very common. You may need to specifically ask for an annual policy duration during your quoting process as most companies will default to a policy period of six months.
Below are some car insurance companies that offer 12-month policies.
There are some instances in which you might not be eligible for a 12-month policy from these insurance companies: if your state does not offer the program, or if you’re not eligible for coverage from the company — USAA only accepts military members and their families, while The Hartford only offers coverage for drivers over the age of 55.
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. On a standard six-month policy, rates are “revisited” every six months via a rate revision. Even if you didn’t have an accident or add or change vehicles or drivers, your rate can still increase due to a rate revision.
Every year, an insurance company reviews its claims-to-revenue ratio to determine its premiums going forward. If your insurance company paid out more in claims than it earned in revenue during the previous period, it could charge 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 negative, depending on your situation. However, rate revisions can sometimes be positive — the company was profitable and a lower rate is issued. However, this is fairly rare. It’s more likely to have a rate revision that increases your rates than one that lowers them.
In nearly all other aspects, a 12-month policy is the same as a six-month contract. You still pay a down payment (this is always a requirement), you must meet your state's required coverage level, and pay your bill on time.
How much does a 12-month auto insurance policy cost?
As we stated, 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 estimated prices for 12-month car insurance policies from leading insurers (methodology). Remember that these rates are averages. Depending on your exact location and driving record, your premium can change.
Auto insurance data methodology
The auto insurance rates published in this guide are based on the results of The Zebra's State of Insurance car insurance pricing analysis. This analysis of more than 83 million insurance rates spans every U.S. ZIP code, using a sample user profile: a 30-year-old single male driver with a Honda Accord, good credit and full coverage at these levels:
- $50,000 per person/$100,000 per incident for bodily injury liability
- $50,000 per incident for property damage liability
- $500 deductibles for collision and comprehensive coverage
To generate pricing for particular rating factors, we adjusted the driving profile based on common pricing factors used by major car insurance companies. These factors include credit score, coverage level, driving record and others.
In some instances, average rates from Liberty Mutual were derived from internally sourced sales data.
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 potential downsides of locking in your insurance pricing for 12 months?
12-month policies can be 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 you will have to do some research on your own.
Your car insurance rates are locked in for a year
This is both a benefit and con 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 for insurance coverage 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 policyholder 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
Lower rates aren't guaranteed
Although your rates are locked in for a full year, that doesn’t automatically equate to a lower insurance premium. Your best bet for finding an affordable premium to compare as many auto insurance companies as possible, finding quotes for six-month and 12-month policies.
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About The Zebra
The Zebra is not an insurance company. We publish data-backed, expert-reviewed resources to help consumers make more informed insurance decisions.
- The Zebra’s insurance content is written and reviewed for accuracy by licensed insurance agents.
- The Zebra’s insurance editorial content is not subject to review or alteration by insurance companies or partners.
- The Zebra’s editorial team operates independently of the company’s partnerships and commercialization interests, publishing unbiased information for consumer benefit.
- The auto insurance rates published on The Zebra’s pages are based on a comprehensive analysis of car insurance pricing data, evaluating more than 83 million insurance rates from across the United States.