Pros and Cons of 12-Month Car Insurance Policies

A 12-month policy offers rate stability, but it may come with higher up-front costs.

Theresa Stevens
Theresa Stevens
  • AFCPE Accredited Financial Counselor

  • 6 years experience in the personal financial industry

Theresa is a writer and former financial advisor with experience helping clients solve money challenges. She uses her expertise to clarify complex personal finance concepts.


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Ashley Cox
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Ashley CoxSenior Managing Editor
  • 7+ years in content creation and management

  • 5+ years in insurance and personal finance content

Ashley is a seasoned personal finance editor who’s produced a variety of digital content, including insurance, credit cards, mortgages, and consumer lending products.

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Mark Friedlander
Reviewed byMark Friedlander
Mark Friedlander
Mark FriedlanderDirector, Corporate Communications, Triple-I
  • Corporate communications director for Insurance Information Institute

  • 20+ years in insurance and communications

As Director, Corporate Communications for Triple-I, Mark serves as the non-profit’s national spokesperson, sharing information and education on a wide array of insurance issues.

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Cheapest recent rates

Drivers have found policies from Root, Direct Auto, Safety Insurance, and more, for rates as low as $36/mo. through Insurify

*Quotes generated for Insurify users within the last 10 days. Last updated on January 27, 2025. Actual quotes may vary based on the policy buyer’s unique driver profile.

Rates shown are real-time Insurify user quotes from 120+ insurance companies and Quadrant Information Services data. Insurify’s algorithm excludes anomalous quotes and anonymizes personal details, then displays refined quotes by price, date, and insurer popularity up to 10 days ago from January 27, 2025. Actual quotes may vary based on the policy buyer’s unique driver profile.

*Quotes generated for Insurify users within the last 10 days. Last updated on January 27, 2025. Actual quotes may vary based on the policy buyer’s unique driver profile.

Rates shown are real-time Insurify user quotes from 120+ insurance companies and Quadrant Information Services data. Insurify’s algorithm excludes anomalous quotes and anonymizes personal details, then displays refined quotes by price, date, and insurer popularity up to 10 days ago from January 27, 2025. Actual quotes may vary based on the policy buyer’s unique driver profile.

Most car insurance companies offer coverage that lasts for either six or 12 months — though a six-month car insurance policy is the industry standard. You might want your car insurance policy to renew on an annual basis to experience less frequent premium increases and lock in a good rate and discount eligibility for the entire year.

Throughout the policy term, your auto coverage helps protect you against various risks, such as accidents, theft, and injury. At the end of the 12-month period, you can renew your policy with the same insurer or shop around for a better car insurance deal.

Here’s what you need to know about purchasing an annual auto insurance policy.

Quick Facts
  • Nationwide, Travelers, and Liberty Mutual all offer 12-month policies.

  • An annual car insurance policy may provide coverage stability.

  • A 12-month policy isn’t always cheaper than a six-month policy.

12-month car insurance pros and cons

Before buying 12-month car insurance, you should understand the advantages and disadvantages of this option to determine if it works well for you.

Pros
  • Fewer rate changes: With a 12-month policy, you can count on paying the same monthly rate until the policy’s renewal date.

  • Less frequent renewals: Renewing your car insurance policy yearly instead of every six months can save you time and energy.

  • Fewer interruptions to coverage: It’s easier to ensure no lapses in coverage if you have to renew your policy only once per year.

  • Fewer rate increases: Even if you get into an accident in month five of your 12-month policy, your rate will stay the same for the next seven months until your renewal date.

Cons
  • Lack of flexibility: You may not be able to switch insurance companies without a fee or cancellation penalty if you find a lower rate from a different insurer halfway through your policy term.

  • High up-front costs: Depending on your financial situation, you may face challenges paying for a 12-month policy up front.

  • Not cheaper: Even though you’re signing a longer contract, a 12-month insurance policy typically isn’t cheaper than a six-month policy and may even have a slightly higher premium.

  • Your rate doesn’t go down: While your rate can’t increase, it also can’t decrease until the end of your contract, regardless of good driving or a violation being removed from your record.

What companies offer 12-month car insurance policies?

Though six-month car insurance is the standard for most insurers, some companies allow you to lock in coverage for a full year. The following table shows some companies that offer 12-month policies and their average monthly rates for liability-only and full-coverage car insurance.

Insurance Company
Average Quote: Full Coverage
Average Quote: Liability Only
USAA$96$44
State Farm$110$51
GEICO$114$52
Allstate$133$60
Progressive$140$79
American Family$167$74
Nationwide$179$81
Travelers$190$85
Liberty Mutual$192$91
Farmers$239$105
The General$240$111
Disclaimer: Table data sourced from real-time quotes from Insurify's 50-plus partner insurance providers. Actual quotes may vary based on the policy buyer's unique driver profile.

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Average cost of 12-month car insurance policies

Drivers with 12-month car insurance policies pay an average of $101 per month for liability coverage and $194 per month for full coverage, Insurify data shows.

Full-coverage rates increased by 15% in the first half of 2024 and are expected to increase a total of 22% by year’s end.

Several factors are driving up car insurance rates, including higher vehicle maintenance and repair costs, expensive new-car prices, and increasingly severe and frequent weather events.

Learn More: 6-Month vs. 12-Month Car Insurance

Learn More: 6-Month vs. 12-Month Car Insurance

When to consider 12-month car insurance

You might want to consider a 12-month car insurance policy over a six-month policy in several different situations:

  • You want a stable rate. A 12-month policy allows you to lock in your insurance rate for an entire year. With rates rising across the country, having yours locked in for a longer term could be financially beneficial.

  • You don’t want to renew as often. Having coverage for a full year provides convenience, as you don’t have to worry about renewing your policy as frequently.

  • You have a clean driving record. A 12-month auto insurance policy makes the most sense if you have a clean driving record so you can lock in a good rate for an entire year.

  • You need consistent coverage. If you don’t borrow or rent vehicles and don’t need short-term coverage, a 12-month policy probably makes more sense.

How to get the most affordable 12-month car insurance

Even with rising car insurance costs, you can still do some things to save money on your annual car insurance policy, including:[1]

  • Ask about discounts. Most insurance companies offer car insurance discounts, so talk to your agent. You may be able to save for things like being a safe driver, paying your premiums in full, making good grades, and more.

  • Increase your deductible. Increasing your deductible can lower your monthly premiums. Just make sure you’re comfortable paying the higher deductible amount if you need to file a claim.

  • Bundle policies. You can often score a discount from your insurance company if you bundle your car insurance policy with other policies, such as a renters or home insurance policy.

  • Shop around. Even with a 12-month policy, comparing quotes from at least three different insurers before your renewal date is the best way to make sure you’re still getting the most affordable policy for your situation.

Factors that can affect your rates for a 12-month car insurance policy

Factors that can influence a six-month policy also affect the cost of a 12-month insurance policy. The most common factors include:[2]

  • illustration card https://a.storyblok.com/f/162273/150x150/8aeabb608a/family-96x96-blue_002-girl.svg

    Age

    Teenagers and drivers younger than 25 pay the most for car insurance. Senior drivers can also face increased rates.

  • illustration card https://a.storyblok.com/f/162273/150x150/dc01f991d6/surgery-96x96-orange_010-location.svg

    Location

    The accident history, vehicle theft and vandalism rates, and costs of repairs where you live influence auto rates in your area. If you live somewhere prone to car theft and vandalism, an insurer may adjust rates accordingly.

  • illustration card https://a.storyblok.com/f/162273/150x150/e80d4ae197/car-and-driving-96x96-gold_019-car.svg

    Vehicle make and model

    The type of car you drive can affect how much you pay for insurance. You may face higher rates if you drive a new car that would cost a lot to repair if damaged in an accident. Insurers also consider your vehicle’s safety features and likelihood of theft when calculating rates.

  • illustration card https://a.storyblok.com/f/162273/x/c939068e05/miles.svg

    Annual mileage

    The more time you spend behind the wheel, the greater chance you have of needing to file an insurance claim.[3] If you drive more than average, insurers may raise your rates to account for the added risk.

  • illustration card https://a.storyblok.com/f/162273/150x150/28fd0b0ea3/car-and-driving-96x96-blue_023-driving-test.svg

    Driving record

    Speeding tickets and other moving violations, including the tickets of other drivers on your policy, can affect your insurance rate.

  • illustration card https://a.storyblok.com/f/162273/150x150/c766092b3a/banking-96x96-yellow_031-credit-card.svg

    Credit history

    Your credit history may affect insurance costs in states where insurers can use your credit to generate a credit-based insurance score. If you have good credit, you may pay less for insurance.

  • illustration card https://a.storyblok.com/f/162273/150x150/95fa30ac35/insurify-icons-auto-orange-96x96_005-insurance.svg

    Previous claims

    Most insurers report your claims activity to the LexisNexis Comprehensive Loss Underwriting Exchange (C.L.U.E.). Insurers may use this information to determine rates.

12-month car insurance FAQs

When shopping around for 12-month car insurance, you may have more questions about how it works. The information below should help you navigate the process.

  • Do all insurance companies offer 12-month car insurance?

    No. Not all insurance companies offer 12-month auto insurance policies. 

    Though some companies offer coverage on an annual basis, many default to the standard six-month policy duration. Some prominent insurers that offer 12-month policies include Nationwide, Liberty Mutual, and Travelers.

  • Is 12-month car insurance cheaper than six-month car insurance?

    Not necessarily. Unless you choose to pay the full premium up front, you won’t typically see a difference in payments.

    Several factors other than policy duration affect car insurance rates, such as your age, driving record, and location. You should get quotes from a few different insurers for 12-month and six-month policies to compare rates and coverage options.

  • Should you pay your 12-month car insurance premiums monthly or in full?

    It depends on your financial situation. If you can afford to pay up front, many insurers will offer you a discount for paying in full. Opting to pay monthly shouldn’t affect your premiums too much.

  • Does GEICO offer 12-month policies?

    GEICO offers 12-month policies to people who have had a clean driving record for at least three years. If you’re interested in getting a 12-month policy with GEICO, talk to an insurance agent about your policy options.

  • Does Progressive offer 12-month policies?

    Yes. Progressive offers 12-month policies.

  • Is the total premium the monthly or annual cost?

    The total premium typically refers to the annual cost of your car insurance policy (even if you pay your premiums monthly).

  • The policy of my car insurance ends later this month. What happens after that?

    Many insurance policies will automatically renew by the expiration date. Ask your insurance agent if your policy will renew automatically. If it does, you don’t need to do anything.

    If your policy doesn’t renew automatically you’ll either need to contact your current insurer to let it know you want to renew, or you’ll need to shop around and find a new policy before your current policy expires so that you can avoid a lapse in coverage.

  • Can I change car insurance companies anytime?

    Yes. You can change car insurance companies at any time and for any reason.[4] But the best time to cancel your current policy is before the renewal date, which can help you avoid cancellation fees.

Methodology

Insurify data scientists analyzed more than 90 million quotes served to car insurance applicants in Insurify’s proprietary database to calculate the premium averages displayed on this page. These premiums are real quotes that come directly from Insurify’s 50+ partner insurance companies in all 50 states and Washington, D.C. Quote averages represent the median price for a quote across the given coverage level, driver subset, and geographic area.

Unless otherwise specified, quoted rates reflect the average cost for drivers between 20 and 70 years old with a clean driving record and average or better credit (a credit score of 600 or higher).

Liability-only premium averages correspond to policies with the following coverage limits:

  • Bodily injury limits between state-minimum rates and $50,000 per person, $100,000 per accident
  • Property damage limits between $10,000 and $50,000
  • No additional coverage
Full-coverage premium averages correspond to the same bodily injury and property damage limits in addition to:
  • Comprehensive coverage with a $1,000 deductible
  • Collision coverage with a $1,000 deductible

Quotes for Allstate, Farmers, GEICO, State Farm, and USAA are estimates based on Quadrant Information Services’ database of auto insurance rates.

Sources

  1. Insurance Information Institute. "How to save money on car insurance."
  2. Insurance Information Institute. "What determines the price of an auto insurance policy?."
  3. Kelley Blue Book. "Average Miles Driven Per Year: Why It Is Important."
  4. National Association of Insurance Commissioners. "A Consumer's Guide to Auto Insurance."
Theresa Stevens
Theresa Stevens

Theresa Stevens is a personal finance writer based in Boston, Massachusetts. Her work has been featured in Forbes Advisor, Bankrate, and more. As a former financial advisor, she has first-hand experience helping people solve their money challenges. When she's not writing, you'll find her trying out new karaoke spots or planning her next trip abroad.

Ashley Cox
Edited byAshley CoxSenior Managing Editor
Headshot of Managing Editor Ashley Cox
Ashley CoxSenior Managing Editor
  • 7+ years in content creation and management

  • 5+ years in insurance and personal finance content

Ashley is a seasoned personal finance editor who’s produced a variety of digital content, including insurance, credit cards, mortgages, and consumer lending products.

Featured in

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Mark Friedlander
Reviewed byMark FriedlanderDirector, Corporate Communications, Triple-I
Mark Friedlander
Mark FriedlanderDirector, Corporate Communications, Triple-I
  • Corporate communications director for Insurance Information Institute

  • 20+ years in insurance and communications

As Director, Corporate Communications for Triple-I, Mark serves as the non-profit’s national spokesperson, sharing information and education on a wide array of insurance issues.

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