Compare the cheapest rates on car insurance to fit your limited or fixed budget. Some states offer insurance programs for drivers who qualify, but learn ways to lower your insurance rates either way including which types of coverage you’re not required to buy.
How do I get car insurance with a limited income?
Drivers in almost every state are required to carry insurance before getting behind the wheel. But that doesn’t mean you have to get the most expensive insurance.
1. Find low-cost private car insurance.
Several car insurance companies offer low overall rates or budget tools to help you find coverage at almost any income or debt level. For example, Geico and USAA are well-known for their cheap rates, and Progressive lets you name the price you can pay and matches coverage accordingly.
Also, you can talk with an insurance agent to help you find the right coverage at the best value for your budget. You might find much lower prices when customizing through an agent than the original online quote in some cases.
2. Look at low-income government auto insurance.
Another option is to look at low-income insurance programs in your state to see if you qualify. These programs tend to include income caps, so you probably won’t qualify if you make above the capped amount even if your income is decreased by debt.
If your state offers you a low-cost policy, you might get only limited protection. For example, state programs might not offer gap insurance, which typically is required for car loans.
3. Save money on your current policy.
Dropping collision and comprehensive coverage could save you $500 a year. And making sure you don’t have any extra coverage or high maximums on your policy can shave even more off your annual rate.
Government auto insurance programs
If you live in California, Hawaii or New Jersey, you could qualify for special state-run auto insurance programs. Each program includes specific requirements for your income level, driver age or the value of your car.
California Low-Cost Auto Insurance program
California drivers can get liability insurance at affordable rates.
Coverage: Coverage options include bodily injury liability, property damage liability, uninsured motorist coverage and medical payments coverage. Collision, comprehensive and gap coverage aren’t currently available.
Cost: Average annual premiums range from $247 to $980, depending on driving record and other factors. Drivers can pay in full or pay in seven installments with a 20% deposit and $4 transaction fee.
Eligibility: To qualify, drivers must meet the following requirements and provide their driver’s license, vehicle registration, initial deposit and proof of income.
Be at least 16 years old with a valid California driver’s license
Make less than a certain income, starting at $31,225 max for a single person home
In Hawaii, this free program serves low-income elderly people, and those who are low-income and blind or disabled by the Social Security Administration’s (SSA) definition.
Coverage: Drivers with a low income in Hawaii can get property damage and bodily injury liability coverage. Collision, personal injury and comprehensive coverage aren’t offered currently.
Cost: The Department of Human Services offers this service completely free to qualifying drivers.
Eligibility: This program is available to drivers who receive financial assistance through the Department of Human Services’s Aid to the Aged, Blind and Disabled (AABD) program. To qualify for the AABD, individuals must be at least 65 years old or meet the SSA’s definition of blind or disabled.
The income cap to qualify is 34% of the 2006 federal poverty level. Applicants must also not have more than $2,000 in resources for an individual and $3,000 for a couple.
Maryland Auto, formerly known as the Maryland Auto Insurance Fund (MAIF), serves any Maryland drivers who can’t get car insurance through a private insurance company.
Coverage: Your options include property damage liability up to $100,000 and bodily injury liability up to $100,000 per person and $300,000 per accident. Also, you can request personal injury protection, comprehensive, collision, rental reimbursement and towing coverage.
Cost: Varies based on your coverage level, car and driving record
Eligibility: Any Maryland resident with a valid driver’s license who has had their coverage denied by two private companies or their policy canceled.
New Jersey offers medical-only coverage through the Special Auto Insurance Policy (SAIP), which doesn’t replace state-minimum required auto insurance.
Coverage: New Jersey’s SAIP covers $10,000 in death benefits and up to $250,000 in post-accident emergency aid. It doesn’t cover follow-up treatments or damage to your car.
Cost: The NJ low income program costs $365 a year if you pay in two installments or $360 if you pay in full.
Eligibility: Drivers who are eligible for federal Medicaid with hospitalization benefits are eligible for the SAIP. Drivers are also required to have a current driver’s license and registration to qualify.
Apply: Start your application online at the State of New Jersey website. You’ll need to show proof of your Medicaid eligibility when you apply.
Cheap car insurance for drivers with a limited income
Compare your options with standard car insurance companies to make sure you’re getting the best value for the coverage provided.
Car insurance cost for drivers with a limited income
Government auto insurance programs can range from no cost to around $1,000 per year, based on the criteria and how much coverage you can get. To compare, the average car insurance rate for any driver is about $1,300 per year.
However, drivers with a limited income sometimes get charged as much as 50% more than other drivers even if drivers with a low income have a perfect record, according to a Consumer Federation of America study of five major companies.
It’s worth shopping around with private companies since different companies approach drivers deemed high risk in different ways. Getting a private policy could help you get more coverage and keep your policy if your income level changes.
What income factors affect your insurance premium?
Why the higher rates? Insurance companies don’t use your income to set rates, but they consider several factors that are indirectly tied to your income.
Homeownership. Homeowners are considered more financially stable than renters by insurance companies. Because of this, homeowners often get discounts and rate drops.
Education. While it’s only a minor difference, more education points to lower premiums, and higher education levels are linked with higher income.
Location. Insurance rates are specific to your ZIP code. Areas that experience high amounts of property damage or car theft claims may be considered higher risk.
Credit score. Higher claim levels and amounts have been associated with lower credit scores, according to data from The Federal Trade Commission. Insurers in California, Hawaii and Massachusetts aren’t legally allowed to use your credit score to determine car insurance rates.
Insurance history. The longer you’ve had insurance in the past, the less you’ll pay. Drivers who couldn’t afford their premiums face increased rates due to any lapses in coverage.
How can I get car insurance on a budget?
Consider how you can save money on your current auto insurance policy, whether or not you qualify for a government program. These tips might help you buy coverage that’s not offered on state-run programs:
Shop around. Since some companies may charge drivers with a low income more, consider quotes from several insurers to get the best value.
Take a safety course. Take a defensive driver course to drop your premium if you don’t have a perfect record.
Bundle policies. If you can get your auto and homeowners insurance in one place, you could save big on both. Some insurers also offer auto and life insurance bundle deals.
Lower coverage when possible. Consider nixing coverage add-ons that you’re unlikely to use, like better car replacement, towing or original manufacturer parts. This will vary based on your driving needs and situation.
Improve your credit score. Save up to $1,000 per year by improving your credit score, then shopping around after your score improves. Most companies use your insurance-based credit score as a factor when setting rates.
Use pay-as-you-go insurance. You could buy telematics or pay-per-mile insurance to pay only for the miles you drive and get rewarded for safe driving. Pay-per-mile works best for those with low mileage and a clean driving history.
If you can, pay out of pocket. It’s a good idea to reconsider making a claim if the damage is inexpensive and only involves your vehicle. Otherwise, you’ll pay more over time in higher insurance premiums. Ask your mechanic about no-interest payment plans.
Discounts to look for
If you’re keeping an eye out for discounts you’d qualify for, these simple discounts can help you squeeze extra savings for your car insurance on a limited budget:
Switch and save
Paid in full
What if I can’t afford car insurance?
While you might be tempted to drop insurance with a limited income, getting in an accident without it could cost you more than the insurance savings.
The costs of an accident when you’re at fault and don’t have insurance aren’t just limited to car damage. You could get penalized by your state for not having insurance, and you might pay for medical injuries including pain and suffering if you injure someone else.
If you can’t afford insurance, think about your alternatives, like selling your car for a used one that’s cheaper to insure, or seeing if you can get around with public transportation or rideshares.
Case study: Paying for an accident out of pocket
Brandon lives on a tight budget and decides to forgo car insurance for a few months. During that time, he gets into an accident with property damage to both vehicles that totals $5,000.
In addition, Brandon is penalized by the state and is now required to file an SR-22 with his insurance, which will increase his annual premium by $900. If he can’t pay out of pocket, he might have to take out a loan as well.
If he had purchased insurance, Brandon would have paid $1,500 for the year, plus another $1,000 for his collision deductible. He would have paid $2,500 for coverage and the accident deductible that year — saving him $3,400 on the accident and insurance combined.
What to watch out for
For the most part, getting insurance works in a similar way for you as for others. Just keep the following in mind:
Changes in life situation. Providers offer different rates based on location, driving record for all drivers on the policy and type of vehicle insured. If any of these factors change, consider shopping around to find the best value for your new situation.
Income qualifications. If you’re opting for a limited-income insurance program, you may need to prove your income with a pay stub, employee ID or other employer-verified document.
Deductible adjustments. Increasing financial responsibility after an accident may not be ideal for your situation. Make sure you can clear your deductible in case you need to make a claim.
What kind of coverage can I opt out of?
As a driver with a limited income, you could opt for coverage that sticks to the necessities.
Collision. Optional coverage that keeps you from paying out of pocket for your own vehicle damage in an accident. Consider skipping this coverage if you don’t drive a lot or you drive an older car.
Underinsured and uninsured motorist. Helpful when at-fault drivers don’t have enough insurance. You could skip this if it’s not required in your state, but it’s typically only a few extra dollars a month to add this to your policy.
Comprehensive. Optional coverage that protects from extraordinary situations like theft or storm damage. Skip this coverage if your car is older or not worth much.
Personal injury protection. Assists with your medical bills and income loss after an accident. In states where this isn’t required, you might be able to skip this coverage if you have good health insurance.
Gap insurance. Optional coverage that pays off your loan or lease if your car is totaled and the claim doesn’t cover the full amount left on your loan or lease. Skip this if you don’t have a car loan or are close to paying your loan off.
Getting a policy that fits all your coverage needs and your budget can be a trick and a half. To keep safe on the roads and some cash in your wallet, compare your car insurance options and make sure you’re not paying more than necessary.
Common questions about limited-income car insurance
No, income level isn’t a direct factor for determining your premium. However, companies do use factors that are indirectly linked to your income, such as credit history, marital status and location.
Typically, vehicles with the cheapest rates are sedans, hatchbacks, minivans and SUVs. Brands that also tend to stay on the lower end include Acura, Chevrolet, Honda, Nissan, Kia, Toyota and Chrysler.
Drivers with reckless driving, DUIs or even traffic violations often pay a range between 10% to 90% more for insurance. Since driving record is one of the biggest factors for any driver, it literally pays to drive safely.
Sarah George is a writer at Finder who unravels complicated topics about insurance, business and finance. She's been wordsmithing for nearly five years, after earning an English education degree. Her insurance know-how has been featured on CarInsurance.com. You can usually find Sarah sipping hot tea and talking through movie plots in her downtime.
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