Liberty Mutual 12-Month Rate Guarantee: Huh?

Liberty Mutual has a new television commercial running at the moment touting their ability to lock in your car insurance rate for 12 months “today!”

For those who have a six-month auto insurance policy, which seems to increase every six months, this might sound like the godsend you’ve been waiting for.

Imagine that; a 12-month auto insurance policy with the same payment and nothing to worry about until next year. Why hasn’t any other insurer come up with this idea yet?

Spoiler alert. This type of policy has been around forever. It’s nothing new and quite frankly, we’re a little disappointed in this type of advertising.

To be fair to Liberty Mutual, TTAI is embarrassed by most insurance advertising. It gives our industry a less than honest reputation.

This is largely because most of it has nothing to do with insurance and does little more than confuse the insurance buying public about the reality of the product…just like advertising for every industry I suppose. Many companies have offered annual auto policies for years. The average cost is typically lower when divided into monthly prices. But it can be harder to pay the full premium at once. So buyers are more likely to pay the extra fees for payment plans.

Why is the 12-month policy better?

Let’s face it. If Liberty Mutual is bothering to tell us about their 12-month policy, it’s probably a better deal for consumers. Put another way, you’ve likely never seen a commercial touting a particular insurer’s six-month auto policy term.

Check out an earlier post about car insurance policy terms to get the whole scoop on the benefits of a 12-month policy. On one hand, it can lock you into certain rates for a year if your record is improving. If something significant falls off three months in, you can always get quotes from different companies to see if it’s worth switching policies. The yearly policy prevents your insurance company from raising your rates for a year unless you let your policy lapse due to non payment or cancel it. This applies to liability insurance, property coverages, and more. If you make changes to your policy like adding or replacing your car, rates would be re-run based on the car you’re adding. But you would still enjoy some protection against increases in rates that are not related to adding another car or changes in the type of car you’re insuring.

[How are auto insurance rates determined?]

*The 12-month rate guarantee is not applicable to drivers in Arkansas, where policies are six months by default.

Read More: Liberty Mutual Insurance Review

Why haven’t I heard of the 12-month policy before?

Following the link in the paragraph above will help explain why this is the case. As discussed above, the 12-month car insurance policy has been around long before Liberty Mutual “guaranteed” it. It’s often smaller companies with stricter underwriting guidelines offering 12-month policies. By weeding out more challenging insured drivers, this type of insurance company has more flexibility to reduce the paperwork by only reissuing your policy once a year instead of once every 6 months.

You don’t hear about it very often because some of the top car insurers (who don’t offer the option) might not be the ones looking out for your best interests.

Why do you think they come up with all those other gimmicks, like the Safe Driving Bonus Check or Name Your Price?

The good news is consumers have more options now than ever before. Many companies offer different contract timelines, accident forgiveness, varying liability amounts, and much more. Contact a local independent insurance agent and ask for a 12-month policy. They’ll likely offer you the option from 10 different insurers at a lower cost than what you’re currently paying for your six-month policy. Be sure to talk to your agent about all available discounts that might lower your rate, and get at least three quotes. When you do the research to find the company that fits your needs, you’ll enjoy a more affordable rate and better coverage overall.

What if you don’t want a full 12-month policy? Liberty Mutual, Geico, and other companies still offer 6-month policy options. Just make sure you’re comparing the monthly cost on each policy so regardless of the policy length, you’ll know where the average rate is actually lower.

Read more: Liberty Mutual Better Car Replacement