CarInsurance.com Insights
- An annual car insurance policy allows you to lock in a rate for an entire year.
- On a monthly basis, 12-month car insurance policies aren’t always cheaper than 6-month policies.
- GEICO and USAA offer some of the cheapest options for drivers seeking a 12-month car insurance policy.
If you want to avoid renewing your insurance policy every six months, a 12-month auto insurance policy might be a good option. One benefit? You can lock in your rate for a year.
However, not every insurer offers this option, and you might prefer a traditional six-month policy period or month-by-month car insurance instead of a yearly car insurance via a 12-month insurance policy.
What is a 12-month car insurance policy?
A 12-month auto insurance policy offers a year of coverage at a time rather than the industry standard of six months. One-year car insurance also prevents billing surprises because a yearlong policy locks in your rate.
“While you can still secure a one year car insurance policy, it’s not as typical anymore. A common policy today is usually six months,” says Jordan Blake, director of communications and operations for Florida-based Shoreline Public Adjusters, which specializes in auto insurance claims.
Twelve-month and six-month car insurance policies differ in a few ways. With a yearlong policy, your rate remains level for 12 months, regardless of accidents, claims or changes to your credit score. If you have a six-month policy, your rate could change more often.
While rates don’t necessarily vary between six-month and 12-month policies, yearlong car insurance policies have a much higher upfront cost. If you aren’t comfortable paying a 12-month premium, a six-month car insurance policy could be a more affordable option in the short term.
Here are some of the pros and cons of 12-month car insurance policies.
Pros of a 12-month policy
- Locked in rate. You won’t have to worry about auto insurance price increases for at least 12 months.
- Streamlined renewal. You only have to deal with your auto insurance renewal once a month, which can cut the amount of time you spend on this chore.
- Potential discounts. Many insurers offer a discount to drivers who opt for a 12-month policy, especially if you choose to pay for the policy in full.
Cons of a 12-month policy
- Harder to find. It can take more effort to track down a 12-month auto insurance policy. .
- Less flexibility if rates drop. If you want to shop around for a cheaper car insurance premium, you’ll have to wait a whole year or potentially pay a cancellation fee.
Companies that may offer 12-month car insurance policies
Only select auto insurance companies offer one-year policies. Here are a few reputable insurance companies that may offer 12-month car insurance policies:
| Company | Average annual cost | Average monthly cost |
|---|---|---|
| Allstate | $3,205 | $267 |
| Farmers | $3,085 | $257 |
| Nationwide | $2,463 | $205 |
| Progressive | $2,675 | $223 |
| State Farm | $2,874 | $239 |
| Travelers | $2,103 | $175 |
| USAA* | $1,572 | $131 |
*USAA is only available to military community members and their families.
Who benefits most from a one-year policy?
A one‑year auto insurance policy can offer financial predictability and fewer renewal hassles — just be sure to shop around to compare pricing and confirm whether you’re eligible.
Is a 12-month car insurance policy right for you? Here are some examples of drivers that can benefit from this type of insurance:
- Drivers with a stable history: If your driver profile remains consistent, including your credit score, driving record and location, a 12-month car insurance policy could be a good option.
- Those worried about rising rates: If you’re concerned about your car insurance premium going up, choosing a one-year policy will guarantee that your rate remains level for at least 12 months.
- Policy bundlers: If you want to bundle multiple insurance policies, like car insurance with renters insurance, a 12-month policy is probably a good choice. Most other insurance policies are only available in 12-month terms.
- Older or long-time customers: If you’re a long-time customer of your insurance company, picking a 12-month policy means you won’t have to renew your policy as often.
6-month vs. 12-month car insurance policies
Most cheap car insurance companies only offer six-month policies. If you want a 12-month policy, you’ll have to research insurers that provide yearlong coverage. However, the right policy for you will depend on unique factors.
Twelve-month car insurance policies cover an entire year, so your rate will remain consistent for a year. If you file a claim or get into an accident during those 12 months, your rate won’t change until your policy renews.
With a six-month policy, your policy is in effect for six months. Your premium could change if you choose to renew your policy after the six-month period ends. For some drivers, that might mean paying a higher premium, while for others, it could mean paying a lower premium.
“Six-month car insurance policies are advantageous to insurers, since it allows for more frequent rate reviews. But the process can be frustrating for drivers — especially when your premium can change every few months, even if nothing has changed with your record,” Blake says.
If you want the ability to shop around and get new quotes more often, a six-month policy is a better choice. With a 12-month policy, you’ll have to wait an entire year before you can switch without potentially paying a cancellation fee.
In the following table, you can see a side-by-side comparison of 12-month vs six-month car insurance policies.
| Features | 12-month policy | 6-month policy |
|---|---|---|
| Duration of coverage | One year | 6 months |
| Rate stability | Locked in for 12 months | Locked in for 6 months |
| Flexibility | Less flexibility to switch providers | More flexibility to switch providers |
| Cost | Higher premium | Lower premium |
| Availability | Few insurers offer 12-month policies | Most insurers offer 6-month policies |
Alternatives to 12-month coverage
A 12-month car insurance policy isn’t the best option for some drivers. Here are some alternatives to a year-long policy that you might consider:
- Six-month policies: Six-month policies remain in effect for half a year. At the end of the policy, you can renew it for another six months or switch to a different policy or insurance company.
- Pay-as-you-go / usage-based: Some insurance companies offer pay-as-you-go car insurance, where you pay a flat monthly rate and a small fee for each mile you drive. It can be a more affordable option for infrequent drivers.
- Temporary/short-term options: Some car insurance companies may offer temporary coverage or short-term coverage options. These aren’t common, so you’ll need to research insurers that offer short-term policies.
How to find the best one-year car insurance policy
If you’re shopping for a one-year car insurance policy, follow these steps to find the best policy for your situation and coverage needs:
- Compare multiple companies: There are many reputable car insurance companies, but each one differs in terms of coverage options, discounts, prices and customer satisfaction. Before you purchase a one-year car insurance policy, comparing a few companies based on your preferences is a good idea.
- Check local agent options: Consider working with a local agent to purchase a car insurance policy. An agent can help you find the best car insurance policy at the lowest price. Working with an agent can also be helpful if you’re purchasing car insurance for the first time or need help customizing a policy for your needs.
- Ask about bundling or discounts: Many car insurance companies offer discounts that can help you save money. You can often find discounts for policy bundling, good students, taking a defensive driving course, paying your premium in full and insuring a vehicle with certain safety features.
- Use CarInsurance.com’s quote tools: Comparing car insurance rate quotes can help you find the cheapest policy for your situation. You can also use CarInsurance.com’s online tools and calculators to get personalized estimates based on your vehicle type, age and other factors.
Frequently Asked Questions: One-year policies
Do all companies offer 12-month car insurance?
No, most insurance companies don’t offer 12-month car insurance policies. Six-month policies are much more common.
Are one-year policies cheaper?
One-year car insurance policies aren’t necessarily cheaper than six-month policies. However, Blake says, “some 12-month policies could cost a bit more because the insurer is locked into that lower rate for an extended amount of time.”
Regardless of the policy’s length, rates depend on various factors, such as your location, credit score, driving record, age and insurance company.
Can I switch mid-policy?
Some car insurance companies allow you to switch mid-policy. However, you might have to pay a cancellation fee if you switch before the policy renewal period.
How do I know if my policy is 6 or 12 months in length?
You can check your insurance contract to determine whether your policy has been active for six or twelve months. Your insurance ID card should also include the policy’s effective and expiration dates.
Methodology
CarInsurance.com editors collected rates from Quadrant Information Services for a 40-year-old male and female driver carrying a full coverage insurance policy with limits 100/300/100 and $500 comprehensive and collision deductibles.
Read the detailed methodology for more information.
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