12-Month Car Insurance: How It Works and Where to Find It

Most car insurance companies offer coverage that lasts for either six or 12 months — though six months 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.

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

How does 12-month car insurance work?

A 12-month car insurance policy covers your vehicle for a full year. Like all insurance policies, your 12-month policy is a contract with an insurance company to help protect you against unexpected financial losses. In exchange, you pay a specific premium amount.^[1]

You should pay the same rate for a full year with a 12-month policy, which can provide stability and protection against potential rate increases or interruptions in coverage. Making changes to your policy during the term — such as adding or removing a vehicle or secondary driver — will still affect your premium.

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

Compare 12-Month Auto Policies

Enter your ZIP codeFind My Quotes

Secure. Free. Easy-to-use.

Based on 3,806+ reviews

4.8/5

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. Rates for liability-only coverage start at $50 per month from Travelers. Nationwide and Travelers provide the cheapest full-coverage monthly quotes, at $91 and $92, respectively.

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: The ability to lock in your car insurance rate for a year is one of the main benefits of a 12-month policy. If you have a six-month policy and get in an accident during month five of your policy term, you could receive a rate increase when your policy renews the following month. With a 12-month policy, you could pay the same rate for seven more months.

• Less frequent renewals: Renewing your car insurance policy yearly instead of every six months can save you time and energy. Additionally, you may find it easier to stay organized with an annual policy, since you only have to remember one renewal date instead of two.

Cons

• Lack of flexibility: You can’t switch insurance companies without a fee if you find a better deal halfway through your policy term. If you cancel an insurance policy mid-term, your insurer may charge a cancellation fee.

• High up-front costs: Depending on your financial situation, you may face challenges paying for a 12-month policy up front. Since 12-month insurance covers you for a longer period, the in-full premium costs more than a six-month policy.

12-month car insurance vs. six-month car insurance: Which should you choose?

Beyond policy duration, six- and 12-month policies don’t have many differences. When your term ends after either six or twelve months, your insurer can choose to renew or end your coverage. You can then reassess your coverage and shop around for a better policy.

With a 12-month policy, you pay for a longer coverage period, which may result in a slightly higher premium than a six-month policy. Due to the longer term, 12-month insurance offers rate stability and protects you from potential price increases during the policy period.

If you anticipate making changes in your auto coverage needs, such as adding or removing drivers or adjusting your coverage limits, a six-month policy may offer more flexibility. With six-month car insurance, you have more opportunities to reassess your coverage needs and switch companies if you find a better or cheaper option.

When to consider 12-month car insurance

• You want a stable rate. A 12-month policy allows you to lock in your insurance rate for an entire year.

• 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 a whole year.

When to consider six-month car insurance

• You want more flexibility. More frequent renewals provide opportunities to shop around for better coverage and rates.

• Your insurance needs are temporary. If you borrow or rent a vehicle for a few months, a six-month policy can provide the necessary coverage without requiring you to commit to a longer-term policy.

• Negative activity is due to fall off your driving record. If you have a speeding ticket or other violation on your driving record due to fall off within a few months, you should stick with a six-month policy. That way, you have the flexibility to shop around once the violation stops affecting your record.

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]

• Age: Generally, teenagers and young drivers younger than 25 pay the most for car insurance. Senior and elderly drivers can also face increased rates.

• Location: The accident history and crime rates where you live influence auto rates in your area. If you live somewhere prone to car theft and vandalism, an insurer may adjust rates in the area accordingly.

• 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.

• 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.

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

• Credit history: Your credit score may affect insurance costs in specific states. If you have a good credit score, you may pay less for insurance.

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

Compare 12-Month Auto Policies

Enter your ZIP codeFind My Quotes

Secure. Free. Easy-to-use.

Based on 3,806+ reviews

4.8/5

12-month car insurance FAQs