Legislation that would require automobile insurance companies in New Jersey to offer drivers the option of purchasing 12-month auto insurance policies was approved today by the Assembly Financial Institutions and Insurance Committee.

The bill would require insurers that offer standard or basic automobile insurance policies in New Jersey to make a 12-month policy term available to consumers. Insurers would still be permitted to offer policies with shorter or longer terms.

Supporters of the measure say annual policies could provide greater stability for motorists by locking in insurance rates for a longer period and reducing the frequency of policy renewals. They also argue that longer policy terms may allow certain discounts included in premium pricing to remain in effect for a greater length of time.

Under current industry practices, many automobile insurance policies are issued with six-month terms, requiring policyholders to renew coverage twice each year.

The legislation specifies that the new requirement would not limit insurers’ flexibility to continue offering policies of varying lengths. Instead, it would establish a 12-month term as an additional option available to consumers purchasing automobile insurance coverage.

If enacted, the bill would take effect one year after being signed into law.