If you want to avoid renewing your insurance policy every six months, a 12-month 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 instead of a 12-month one. Read on to discover whether this type of policy is right for you.
- 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.
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.
The cons? If you have a speeding ticket or accident on your record, you could be paying an elevated rate for longer because the violations will stay on your record until the term ends.
“If you can afford to pay out of pocket a year in advance, it may save you money,” says Carole Walker, executive director of the Rocky Mountain Insurance Association.
Pros of a 12-month car insurance policy
A one-year auto insurance policy comes with several advantages, including the following:
- 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 auto insurance policy
- Harder to find. It can take a little bit more effort to track down a 12-month auto insurance policy.
- Less flexibility. If you want to switch to a different company, you’ll have to wait a full year or potentially pay a cancellation fee.
Can I get 12-month car insurance?
Car insurance policies traditionally run on a six-month renewal cycle. In contrast, a 12-month car insurance policy provides coverage for an entire year.
Not every insurer offers 12-month auto insurance policies. But some do. You may need to shop around for a 12-month car insurance policy, but you have options.
How does 12-month car insurance work?
If you are interested in a one-year insurance policy, call your insurer and ask if it offers the option. If not, don’t be afraid to shop around.
Car insurance companies have different underwriting rules and guidelines. Even if your current insurer doesn’t offer 12-month policy options, you can likely find one that does. Remember, just because a car insurance company says it offers a 12-month term doesn’t mean you’ll automatically meet the company’s underwriting criteria.
So, compare car insurance rate quotes and find out what policy terms you’re eligible for.
Once you find an insurer willing to sell you a 12-month car insurance policy, the process should unfold like it would any other type of policy. You will either pay in installments or upfront for one year of coverage.
Detailed guide: What is car insurance and how does it work?
How much does 12-month car insurance cost?
A 12-month car insurance policy costs an average of $1,895 nationwide. But the cost for a 12-month car insurance policy varies based on your situation and the company you choose to work with.
The table below outlines the different average costs across different insurers.
| Company | State minimum cost | Liability-only cost | Full coverage cost |
|---|---|---|---|
| Geico | $405 | $560 | $1,763 |
| State Farm | $502 | $651 | $1,984 |
| Allstate | $700 | $854 | $2,509 |
| Progressive | $549 | $709 | $1,998 |
| Farmers | $701 | $991 | $2,387 |
| Nationwide | $532 | $651 | $1,548 |
| Travelers | $518 | $646 | $1,606 |
| USAA* | $335 | $435 | $1,381 |
*USAA is only available to military community members and their families.
How much you’ll pay for car insurance monthly vs. annually
Although the costs of any car insurance policy will vary based on your unique situation and the company itself, 12-month policies are typically more affordable on a monthly basis than 6-month policies.
The table below illustrates how monthly costs may be lower when you opt for a 12-month car insurance policy.
| Company | Monthly premium | 12-month cost |
|---|---|---|
| Geico | $147 | $1,763 |
| State Farm | $165 | $1,984 |
| Allstate | $209 | $2,509 |
| Progressive | $167 | $1,998 |
| Farmers | $199 | $2,387 |
| Nationwide | $129 | $1,548 |
| Travelers | $134 | $1,606 |
| USAA* | $115 | $1,381 |
*USAA is only available to military community members and their families.
Month-to-month car insurance: Can I buy car insurance for one month?
How do I know which car insurance policy is right for me?
“Drivers should consider opting for a one-year car insurance policy if they prefer stability and predictability in their insurance rates,” says John Espenschied, owner of InsuranceBrokers.com. “A one-year policy locks in your premium for an entire year, shielding you from potential rate increases that could occur at the six-month renewal period.”
What is the shortest term for car insurance?
A six-month car insurance policy is typically the shortest term available. But some insurers offer shorter terms. For example, Hugo Insurance offers coverage in increments as small as three days.
Learn more about how often you should shop for car insurance
Which auto insurance companies offer 12-month policies?
Several auto insurance companies offer one-year policies. Typically, you can earn a discount on your car insurance costs if you opt for a 12-month policy and agree to pay the entire year of premium costs upfront.
“It locks you in for the next 12 months, whereas you may have the potential for an increase (in your premium) on a six-month renewal,” Walker says.
Start by contacting these insurance companies to ask if you’re eligible for a one-year auto policy:
- Geico
- State Farm
- Allstate
- Progressive
- Farmers
- Nationwide
- Travelers
- USAA
Expert tips for choosing the right car insurance policy
“When shopping for insurance, look at both price and coverage,” says Ryan McEachron, owner of ISU ARMAC Insurance Services. “Compare quotes from multiple companies to find the best value. Review policy details and exclusions carefully. And don’t overlook additional coverage like roadside assistance or rental car reimbursement which provide extra protection at a minimal cost.”
Check out the best time to shop for car insurance
Frequently asked questions: One-year insurance policies
Is a six-month policy cheaper than a 12-month policy?
Car insurance rates differ from insurer to insurer, with each company using its formula for setting costs. Comparison shopping for six-month and 12-month auto insurance policies is the best way to determine whether a 12-month policy will save you money.
As noted above, paying your policy in full usually will save you money on your car insurance, regardless of whether it’s a six-month or 12-month policy.
How can I get car insurance quotes for a 12-month policy?
You can start by contacting your car insurance company to see if they offer longer policy terms. Or, if you’d prefer to get a new insurer, contact the companies listed above. Getting several 12-month auto insurance quotes will help you get the best deal.
Does Progressive offer 12-month policies?
Progressive does not offer 12-month policies if you buy directly from Progressive; if you purchase through a Progressive agent, you may qualify for a 12-month option.
Final thoughts on one-year car insurance
Purchasing a 12-month car insurance policy can give you the peace of mind that you will have coverage for an entire year and your premium costs will remain fixed. And if you pay for a whole year’s worth of premiums upfront, you might save money.
“Talk to your insurance professional about whether there is cost savings for an annual policy renewal,” Walker says.
Resources & Methodology
Sources
- Hugo Insurance. “Hugo Insurance Homepage.” Accessed September 2024.
- Insurance Information Institute “Auto Insurance Basics.” Accessed September 2024.
Methodology
CarInsurance.com commissioned Quadrant Information Services to field rates for 40-year-old drivers with full coverage car insurance (limits of 100/300/100 and $500 deductibles) in 34,588 ZIP codes across the U.S. Percentages are rounded to the nearest whole number.
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