Auto insurance is an anticipated aspect of vehicle ownership. Many places require that you have some insurance, and most financial institutions will mandate it if you have an auto loan. Many factors contribute to car insurance rates. Most drivers do a fair amount of comparison shopping for insurance, given the wide range of plans, coverages, and premiums available today. From the type of coverage to policy duration, there are several things to consider when choosing a plan that is right for you.
Most states mandate that drivers carry a minimum amount of liability insurance to drive legally on roadways. These laws are to protect all drivers on the road. Liability insurance, however, only provides coverage for bodily injury and property damage claims made by other drivers if the policyholder is at fault in an accident. With minimum liability coverages, policyholders and their cars aren’t protected if they cause an accident. As a result, many drivers purchase additional collision and comprehensive coverage to provide protection no matter who is at fault. With additional full coverage insurance, however, comes additional premiums.
Whether you are in the market for liability insurance or full coverage, most insurance companies offer policies that renew every six months. This means that you will be billed for six months of coverage, and the policy will renew semi-annually for another six months of premiums and coverage. When policies renew, however, rates and coverages can change. As a result, some drivers prefer 12-month policies that only renew once a year. Let’s take a closer look at 12-month auto insurance policies.
Pros and Cons
The primary benefit of a 12-month car insurance policy is that rates and coverages are locked in for an entire year. The standard six-month policies offered by most insurers allow the details and rates to be “revisited” semi-annually. Claims-to-revenue ratios are reviewed periodically, and insurers can adjust rates to offset any deficits experienced. Even if nothing changed with your situation, your rates could still increase due to rate revisions and company policies.
The benefit of 12-month policies is the relative infrequency of rate revisions and premium adjustments. With a six-month policy, a driver could see their insurance rates increase twice in one year. In the same sense, however, infrequent rate revisions could also be a drawback based on your situation. If your accident or traffic ticket falls off of your record in the middle of the year, you will still have to pay higher premiums for the remainder of your policy year. Additionally, if insurers lower rates based on profits, you wouldn’t benefit from that until your 12-month renewal.
While most insurance companies only offer six-month policies, you can find a few insurers that offer year-long policies. Many factors such as age, location, driving record, and type of vehicle can impact your insurance rates. The insurance company considers your situation and the perceived risk you pose as a driver and vehicle owner. The insurer uses your rates as a way to mitigate the risk. However, no matter how you’re rated, your premium rates will probably be the same for either a six-month or 12-month policy. Most policyholders don’t report a huge rate difference between the two types of policies.
12-month policies are difficult to find, and the majority of insurers only offer semi-annual plans. The best way to find a policy with the terms and rates you are looking for is to shop around. Online comparison tools allow you to enter basic information and receive multiple personalized quotes from various insurance companies. You will be able to compare prices, plans, terms, and coverages to find the right solution for your insurance needs.
12-month insurance policies aren’t very common. However, they are available from a select group of insurers. If you seek a year-long policy, a little time and research will help you find the right coverage.