12-Month Car Insurance Policies: Yay Or Nay?

WRITTEN BY: Julia Matseikovich


No matter what car insurance coverage you want, from comprehensive coverage to property damage only, you may wonder if you should look for 12-month car insurance policies or if a six-month one is better.

What Are the Pros and Cons Of 12-Month Car Insurance Policies?

Choosing a 12-month car insurance policy is not for everyone. Read on to learn to benefits and downsides of 12-month insurance policies.


There are many reasons to choose a 12-month policy over a 6-month one.

  • One pro for 12-month car insurance policies is that they can offer you a lower monthly payment for your insurance. 
  • If you pay in advance for your 12-month policy, you’re likely to get much lower rates than a 6-month one.
  • Your car insurance rates are only recalculated once a year so that you can budget for a more extended period.
  • Discounts will be locked in for the entire year.
  • Any rate increase won’t be applied until after the year is up.


There are also some downsides to choosing a 12-month auto insurance policy.

  • Because auto insurance rates are only recalculated once a year, you may miss out on any rate reductions.
  • If you have anything in your driving history, such as a speeding ticket, that may drop off your driving record during the next six months, and you’ll probably benefit from a reduction in your rates after that time. By locking into annual car insurance you won’t be able to see this reduction for a further six months.
  • They’re challenging to find, as most insurance companies offer a six-month car insurance policy as standard, with some not offering 12-month policies.
  • If you become unhappy with your current provider, you’ll either have to wait longer to make the switch, or you’ll have to pay cancellation fees.

Other considerations

Regardless of the length of a car insurance policy, they’re all the same. 

  • The duration of a policy doesn’t impact the type of coverage you choose, whether that be full-coverage or liability only.
  • You’re still required to have your state’s minimum auto insurance coverage level.
  • You still have to pay a down payment.
  • You must make all subsequent payments on time.

Six- or 12-Month Car Insurance Policies: Which Are Better?

When choosing between a six- or twelve-month policy, there are many things to consider. Which type of policy is the best car insurance for you depends on several factors.

Advantages of buying a 6-month policy and paying in full

  • You may have more coverage options with a 6-month policy, as your chosen insurance provider may not offer 12-month policies.

Pros of buying a 12-month policy and paying in full

  • You’ll only have to deal with auto insurance companies once a year.
  • Once the annual premium has been paid off, policyholders won’t need to worry about making another car insurance payment for an entire year.
  • If you have a clean driving record and are typically a safe driver, it may be wise to lock in the cheaper car insurance rates you’ll be able to get.

Advantages to paying car insurance monthly

There are many advantages to paying for your auto insurance premium monthly rather than all at once.

  • You make the payments more manageable by breaking up the premium into smaller chunks over the whole policy period.
  • Most people won’t have enough money set aside to pay for their entire insurance costs at once, so you can spread the payments over the whole policy term.
  • If you need to cancel your auto insurance policy and are entitled to a ‘refund,’ you won’t have to wait for the money to return if you haven’t paid it all yet.
  • You could save the money you would have spent on paying your annual premium in one go. This could then be used for your deductible should you need to make a claim.

What Companies Offer 12-Month Car Insurance Policies?

Not all car insurance companies offer 12-month car insurance policies. Some of the ones that do include:

  • Allstate
  • Erie
  • Farmers
  • Infinity
  • Kemper
  • Liberty Mutual
  • MetLife
  • Nationwide
  • Progressive
  • Safeco
  • State Farm
  • The General
  • The Hartford
  • Unique
  • USAA

Most insurance companies default to a 6-month auto insurance policy. If you’re interested in a 12-month one, you’ll likely have to specify when you talk to an agent.

Additionally, just because your insurance company offers 12-month insurance policies, it doesn’t mean you’re eligible for one. This may vary depending on your circumstances. Personal circumstances influencing your auto insurance policy include your driving record and location.

Can You Change Insurance Companies If Your 12-Month Policy Is Still Active?

The best time to switch policies is right before your policy is due for renewal. However, it’s not impossible to change even with an active approach.

Policyholders can speak to their car insurance companies to find out if they’ll have to pay any cancellation fees, and what those fees may be.

You should also ensure that your new insurance kicks in when your old insurance finishes so that you’re not uninsured for any period.


Is it better to pay car insurance monthly or every six months?

Most insurers will offer you a discount if you pay your premium in full. What’s better for you depends on your circumstances. You may decide that being able to pay in monthly installments is worth the additional cost. You may also want to save the money you would have paid up front for paying the deductible if you need to make a claim.

Can you pay for one year of car insurance?

Yes, sometimes. Most insurance companies offer only six-month policies, but some may offer 12-month ones. If you pay for the entire year upfront, you may be able to snag a discount.

Is it cheaper to pay for 12 months of car insurance?

Typically, it’s cheaper to pay your entire premium upfront. Locking in a 12-month policy means you know that your premium is paid for the whole year. However, it also means that if your insurance company would have reduced your insurance rates after the first six months, you won’t be able to take advantage of the savings.

Is car insurance cheaper if you pay monthly?

Car insurance is usually more expensive overall if you pay monthly. For some people, though, paying monthly is their only option. Not everyone can afford a big lump sum once every six or twelve months.

Which is better: monthly or yearly car insurance?

Regardless of how you pay for your car insurance, you agree to the entire 6 or 12 months when you take out a policy. Whether you should pay monthly or in one chunk depends on your circumstances. It might be better to pay it off once if you can afford the lump sum for an annual policy. However, you may find it beneficial to pay monthly instead.

How To Find 12-Month Car Insurance Policies

To find a 12-month car insurance policy, you’ll need to shop around and explicitly ask your insurance agent for the rates for one. When you have a few companies in mind, compare car insurance quotes to make sure you get the best deal available.