Auto Insurance for the Year

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Important facts to know...

  • When you’re purchasing auto insurance, you’ll have to choose an annual or a six-month policy
  • Insurance terms dictate how long your rates will remain the same without there being any surcharges
  • It’s beneficial to buy an annual policy because you know exactly how much you’ll pay for an extended period
  • Make sure to compare terms and other coverage offerings available through carriers to make the best choice
  • If at any time during your term you need to cancel your policy, you have the freedom to request cancellation

Most people want to know how much they’re going to pay for insurance before they buy a plan. Unfortunately, you can’t just look up the term auto insurance or visit a retailer to find out how much your personal insurance will cost.

In the insurance industry, anyone who wants to buy insurance is going to have to get an auto quote first.

Premiums are a main focus in the marketplace. Most consumers put cost before everything in the insurance industry, but there’s a lot more to consider when you’re choosing which provider is worth buying from.

Compare quotes today using our free rate tool! Then, be sure to do further research to make sure your top choice is reputable and a right fit for you.

Some don’t realize that some policies last longer than others. If you’re looking to stay loyal to a carrier instead of bouncing from company to company, here’s a guide to annual policies.

Why do some policies provide coverage longer than others?

If you’re looking for a personal car insurance policy on a car that you own, you’ll probably be shopping for coverage in the standard or preferred marketplace. There are very few scenarios where drivers are looking for specialty short-term policies.

Consumers who get auto insurance quotes for standard liability or physical damage coverage will have to choose if they want to buy a six-month or a 12-month policy. The duration that you select is called a term or a policy period.

You can find out how long your term on your existing policy is by looking at your ID cards or your declarations page.

Do all insurance companies sell both types of policies?

When it comes to standard insurance, you’ll either secure coverage for six months or 12 months at a time. In some states, insurance companies have no choice but to offer both types of policy.

In others, the carrier can choose from a six-month term and a 12-month term. Some providers in states without restrictions offer both terms.

You’ll need to compare rates and shop the market to determine which company offers annual terms.

If you’re getting direct quotes, ask the agent about their term offerings before you start giving information.

If you’re shopping online, you’ll be able to distinguish the six-month companies from the 12-month policies. Currently, the following carriers offer car insurance for a year:

  • Eerie Insurance
  • USAA
  • Nationwide
  • Infinity
  • Liberty Mutual
  • MetLife
  • National General Insurance
  • The Hartford
  • The General
  • AAA

Why do more companies offer six-month policies?

The list of companies that offer annual coverage isn’t as expansive as you might think. That’s because a majority of companies offer solely a six-month plan. Semi-annual terms are more beneficial to the insurer in a few ways.

  1. First off, the company is only stuck in the contract for half the time if the driver starts to file claim after claim.
  2. Second, the carrier can up-charge the client after six months instead of a year if they do have a chargeable claim.

Since it’s a for-profit industry, it’s only reasonable to assume carriers want to choose the more profitable term option with less associated risk.

Why is the term duration so important?

Insurance terms aren’t just random dates that signify when you started your relationship with the carrier. The dates mean a lot more because the term is the policy period where coverage is afforded.

As long as you’re paying your premiums and you’re in compliance with contract terms, you know you have auto coverage.

The set of dates benefits you more than it does the insurer. If there wasn’t a set of dates saying when the contract started and when it will end, the carrier could drop you for any reason at any time.

Luckily, the term dictates how long you’ll have coverage and how long your rates will stay the same without increases.

What happens to your car insurance after the year is up?

The only time your policy premium will change during your annual term is when you make voluntary changes to your policy.

Your rate can change – not your classification – if you endorse the policy by changing any of the following:

  • your physical address
  • your usage
  • your vehicle
  • drivers on the policy,

When the policy is reaching its expiration date, that doesn’t mean you have to rush to start shopping for coverage. As long as you have the option, you can renew your coverage at the expiration for a new rate.

The renewal documents will show how much you’re about to pay for the upcoming year. If you don’t want to stay with the carrier, you can always shop for a new policy with a new provider.

What if you end up selling your car?

It’s nice to have a policy for a year when you know you need it but sometimes things happen that aren’t expected. If you wind up selling your car or you find a plan that’s priced well below your current plan, you might be interested in canceling your one-year term early.

You always have the option to cancel your insurance early as the policyholder. The contract offers you more flexibility than the insurer and you can exit the contract for any reason and at any time.

Ask the company if you have to pay a fee for the cancellation before you make a decision for cost savings.

How can annual policies be paid?

If you’re avoiding an annual policy because you can’t afford to pay your premiums in full, you can select a payment option. Many carriers offer their clients installment options which may include:

Don’t rely on strictly pricing when you’re shopping for an annual policy. Try to research each carrier by looking up ratings, claims satisfaction records, and financial stability grades.

Once you do this, you need to get multiple quotes at once to compare rates. Use our free rate tool to do a thorough comparison in a matter of minutes.

References:

  1. https://www.thebalance.com/can-i-cancel-car-insurance-anytime-527400
  2. http://www.rmiia.org/auto/steering_through_your_auto_policy/Cost_of_Auto_Insurance.asp
  3. http://guides.wsj.com/personal-finance/insurance/how-much-car-insurance-do-you-need/
  4. http://www.mass.gov/ocabr/insurance/vehicle/auto-insurance/massachusetts-consumer-bill-of-rights-for.html
  5. http://dor.mo.gov/drivers/insurinfo.php
  6. http://www.nasdaq.com/article/will-a-claim-raise-my-rates-if-the-accident-is-not-my-fault-cm137903
  7. https://www.thebalance.com/what-is-a-policy-period-527306
  8. https://www.thebalance.com/what-is-an-insurance-renewal-527419
  9. http://www.investopedia.com/ask/answers/091815/can-your-insurance-company-cancel-your-policy-without-notice.asp
  10. https://www.thebalance.com/best-ways-to-make-your-car-insurance-payment-527399

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