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

Most car insurance policies renew every six months. Some providers allow you to secure coverage for an entire year.

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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Katie Powers
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Katie PowersAuto and Life Insurance Editor
  • Licensed auto and home insurance agent

  • 3+ years experience in insurance and personal finance editing

Katie uses her knowledge and expertise as a licensed property and casualty agent in Massachusetts to help readers understand the complexities of insurance shopping.

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Mark Friedlander
Reviewed byMark Friedlander
Mark Friedlander
Mark FriedlanderDirector, Corporate Communications
  • 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.

Updated September 27, 2023 at 12:00 PM PDT

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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.

Quick Facts
  • Some insurers don’t offer 12-month car insurance policies.

  • An annual car insurance policy may provide coverage stability.

  • A 12-month policy isn’t always cheaper than a six-month 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 for at-fault accidents and other vehicle-related hazards. 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.

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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 illustrates some companies that offer 12-month policies and their average rates for liability-only and full-coverage car insurance.

Insurance CompanyAverage Quote: Full CoverageAverage Quote: Liability Only
Nationwide$91N/A
Travelers$198$89
National General$188$79
Safeco$124$66
Mercury$151$83
State Auto$202N/A
Direct Auto$194$93
Liberty Mutual$200$95
Dairyland$229$83
Infinity$268$175
Pronto$452$299
The General$250$116
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.

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 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. 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 may not be able to 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 an early cancellation penalty.

  • 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 12 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.

Good to know

Insurance companies may offer different discounts and incentives based on policy duration. Some insurers may provide discounts for purchasing a 12-month policy up front, as it reduces administrative costs. However, some insurers like having the ability to recalculate your insurance costs twice a year and therefore won’t offer incentives to purchase a 12-month policy.

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. 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 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 no longer triggers a surcharge on your policy premium.

How to Buy Temporary Car Insurance

How to Buy Temporary Car Insurance

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, 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 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 history may affect insurance costs in states where insurers can use your credit to generate a credit-based insurance score. 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 this information to determine rates.

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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.

  • Is a 12-month car insurance policy right for you?

    You may want a 12-month policy if you value stability and don’t want to deal with frequent policy renewals. A 12-month policy may work better for budgeting purposes, since your car insurance expenses will be set for the entire year. 

Sources

  1. Consumer Financial Protection Bureau. "What is insurance?." Accessed May 30, 2023
  2. Insurance Information Institute. "What determines the price of an auto insurance policy?." Accessed May 30, 2023
  3. Kelley Blue Book. "Average Miles Driven Per Year: Why It Is Important." Accessed May 30, 2023
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.

Katie Powers
Edited byKatie PowersAuto and Life Insurance Editor
Photo of an Insurify author
Katie PowersAuto and Life Insurance Editor
  • Licensed auto and home insurance agent

  • 3+ years experience in insurance and personal finance editing

Katie uses her knowledge and expertise as a licensed property and casualty agent in Massachusetts to help readers understand the complexities of insurance shopping.

Featured in

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Mark Friedlander
Reviewed byMark FriedlanderDirector, Corporate Communications
Mark Friedlander
Mark FriedlanderDirector, Corporate Communications
  • 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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