Auto Insurance for Low-Income Individuals (How to Save)
Hawaii, New Jersey, and California have auto insurance programs for low-income individuals, but drivers in other states must shop around to save on car insurance.
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Written by
Rachel Bodine |
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Reviewed by
Daniel Walker
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UPDATED: Nov 18, 2022
It’s all about you. We want to help you make the right coverage choices.
Advertiser Disclosure: We strive to help you make confident auto insurance decisions. Comparison shopping should be easy. We are not affiliated with any one auto insurance provider and cannot guarantee quotes from any single provider. Our partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different companies please enter your ZIP code on this page to use the free quote tool. The more quotes you compare, the more chances to save.
Editorial Guidelines: We are a free online resource for anyone interested in learning more about auto insurance. Our goal is to be an objective, third-party resource for everything auto insurance related. We update our site regularly, and all content is reviewed by auto insurance experts.
UPDATED: Nov 18, 2022
It’s all about you. We want to help you make the right coverage choices.
Advertiser Disclosure: We strive to help you make confident auto insurance decisions. Comparison shopping should be easy. We are not affiliated with any one auto insurance provider and cannot guarantee quotes from any single provider. Our partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different companies please enter your ZIP code on this page to use the free quote tool. The more quotes you compare, the more chances to save.
On This Page
Table of Contents
- Only California, Hawaii, and New Jersey offer programs to assist low-income drivers
- Low-income drivers in other states can reduce their costs by comparing quotes, applying for discounts, and more
- Improving your credit score can go a long way toward reducing your auto insurance costs
Auto insurance is necessary to drive legally, but when you can’t afford car insurance it can be hard to know how to keep your coverage. If you need help paying for car insurance, there may be a government car insurance assistance program in your state that can help you pay for car insurance.
If there are no programs in your state for cheap auto insurance, as it is only offered in a few states, then you will have to take action to reduce your rates.
To help you figure out what to do if you can’t afford car insurance, we will go more in-depth into government car insurance for low-income families, as well as our best tips on how to find savings on car insurance to make it more affordable.
Table of Contents
State-Sponsored Auto Insurance Programs For Low-Income Individuals
A few states have government-sponsored programs to help low-income drivers afford car insurance. Currently, only car insurance in California, car insurance in Hawaii, and car insurance in New Jersey are offered by government assistance programs. We’ve outlined each state’s program for low-income car insurance below.
California Low-Cost Automobile (CLCA) Insurance Program
According to California Low Cost Auto Insurance, to qualify for the CLCA program, drivers must meet income eligibility requirements and driving eligibility requirements. For income, drivers can’t make more than the following per household:
- One-person household: $33,975
- Two-person household: $45,775
- Three-person household: $57,575
- Four-person household: $69,375
Drivers must also have a car worth less than $25,000, fewer than two personal cars registered in their name, and a good driving record in order to qualify for government auto insurance. Through the CLCA program, drivers can get the minimum liability auto insurance required by California, as well as uninsured motorist coverage and medical payments insurance coverage.
Hawaii Low-Income Auto Insurance Program
Hawaii has less information readily available about its program, which can make it harder for drivers to find information about if they are eligible. Hawaii will provide free auto insurance to people with disabilities or who meet financial eligibility.
To qualify financially, households need to receive financial assistance payments from the government or supplemental security benefits.
In addition, drivers must have exhausted all other options for paid insurance in Hawaii before they are deemed eligible for Hawaii’s free insurance program. As with California’s program, the vehicles must be owned and used for personal use, not for commercial use.
New Jersey’s Special Automobile Insurance Policy (SAIP)
New Jersey’s SAIP program is only for drivers who are enrolled in Medicaid and costs $1 a day. It is a bare minimum policy intended to help those who need help with car insurance payments.
If you are in an accident, the SAIP coverage will cover up to $250,000 of emergency treatment and the costs of the brain and spinal cord injury. SAIP coverage will also give a $10,000 death benefit.
However, SAIP won’t cover any of the damages or injuries that other parties might suffer or any damages to your own vehicle. Because SAIP doesn’t provide these basic bodily injury liability insurance benefits or protection for your own car, we recommend getting SAIP as a last resort.
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Regular Insurance Costs for Low-Income Drivers
Unless you live in one of the three states with government assistance programs specifically for auto insurance, you will have to pay for auto insurance on your own.
Insurance companies don’t use a driver’s income as a factor to calculate insurance rates, so there are no automatic discounts or reduced rates for low-income drivers.
Instead, there are many factors that determine car insurance rates such as your age, location, driving record, vehicle, and more to calculate your auto insurance rates. So even if you are struggling to pay for car insurance, you will still pay the same as a driver who has a similar driving record but a higher income.
However, some states come with cheaper rates based on location and other factors. To get an idea of how much insurance rates vary by company, take a look at the table below.
| Insurance Company | Average Minimum Coverage Rates | Average Full Coverage Rates |
|---|---|---|
| Allstate | $87 | $160 |
| American Family | $66 | $116 |
| Farmers | $76 | $138 |
| GEICO | $50 | $80 |
| Liberty Mutual | $90 | $173 |
| Nationwide | $61 | $115 |
| Progressive | $69 | $105 |
| State Farm | $40 | $86 |
| Travelers | $53 | $99 |
| Average | $69 | $119 |
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Purchasing just the minimum liability insurance in a state can cut your insurance costs in half. Living in one of the states with the cheapest auto insurance rates can also reduce your auto insurance costs.
| State | Allstate | Geico | Nationwide | Progressive | State Farm | Travelers | Average | ||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| AK | $1,667 | $1,195 | $807 | $1,223 | |||||||
| AL | $1,332 | $1,099 | $1,189 | $1,388 | $1,337 | $972 | $1,370 | ||||
| AR | $2,007 | $1,120 | $1,581 | $1,620 | $989 | $1,367 | $1,416 | ||||
| AZ | $2,226 | $808 | $1,436 | $1,039 | $999 | $1,292 | $1,352 | ||||
| CA | $1,996 | $1,553 | $1,774 | ||||||||
| CO | $2,054 | $1,161 | $1,324 | $1,490 | $1,168 | $1,475 | |||||
| CT | $2,421 | $768 | $1,382 | $1,641 | $1,126 | $1,030 | $1,550 | ||||
| DC | $2,976 | $855 | $2,126 | $1,420 | $1,371 | $1,750 | |||||
| DE | $2,555 | $1,243 | $1,777 | $1,115 | $1,431 | $1,019 | $2,180 | ||||
| FL | $2,263 | $1,103 | $1,272 | $1,889 | $1,223 | $1,624 | |||||
| GA | $2,035 | $754 | $1,878 | $1,417 | $1,324 | $1,778 | |||||
| HI | $1,113 | ||||||||||
| IA | $1,006 | $900 | $930 | $804 | $1,143 | $1,049 | |||||
| ID | $1,587 | $708 | $1,018 | $653 | $707 | $992 | |||||
| IL | $2,172 | $587 | $1,146 | $1,103 | $796 | $1,077 | $1,153 | ||||
| IN | $1,729 | $785 | $1,198 | $849 | $872 | $856 | $1,207 | ||||
| KS | $1,973 | $923 | $1,141 | $1,575 | $1,003 | $1,071 | $1,447 | ||||
| KY | $988 | $2,277 | $1,377 | $1,212 | $1,725 | $1,610 | |||||
| LA | $2,547 | $1,739 | $1,990 | $1,537 | $1,953 | ||||||
| MA | $1,342 | ||||||||||
| MD | $2,481 | $1,671 | $1,313 | $1,493 | $1,322 | $1,656 | |||||
| ME | $1,334 | $454 | $1,166 | $724 | $759 | $1,053 | |||||
| MI | $5,017 | $1,219 | $3,184 | $1,880 | $2,585 | $2,268 | $3,193 | ||||
| MN | $1,977 | $1,118 | $1,070 | $828 | $1,732 | ||||||
| MO | $1,831 | $1,112 | $816 | $1,212 | $1,051 | $1,326 | |||||
| MS | $1,822 | $886 | $1,190 | $1,487 | $1,018 | $1,092 | $1,282 | ||||
| MT | $1,903 | $1,020 | $1,093 | $2,109 | $870 | $1,392 | |||||
| NC | $2,095 | $851 | $1,367 | $393 | $949 | $1,228 | $1,129 | ||||
| ND | $1,679 | $749 | $949 | $1,364 | $943 | $1,715 | |||||
| NE | $1,545 | $1,139 | $952 | $1,175 | $850 | $1,358 | |||||
| NH | $1,585 | $624 | $953 | $785 | $729 | $1,188 | |||||
| NJ | $1,948 | $917 | $1,154 | $1,403 | $1,679 | $1,915 | |||||
| NM | $1,958 | $1,119 | $1,186 | $1,069 | $855 | $1,300 | |||||
| NV | $2,046 | $1,361 | $1,386 | $1,018 | $1,272 | $1,122 | $1,470 | ||||
| NY | $1,820 | $963 | $2,026 | $1,188 | $1,695 | $2,159 | $1,761 | ||||
| OH | $1,483 | $728 | $1,408 | $1,051 | $863 | $784 | $1,065 | ||||
| OK | $1,668 | $1,350 | $1,362 | $1,122 | $1,577 | ||||||
| OR | $1,896 | $1,155 | $1,372 | $959 | $926 | $1,197 | $1,326 | ||||
| PA | $1,829 | $843 | $1,066 | $1,834 | $938 | $931 | $1,449 | ||||
| RI | $2,333 | $1,547 | $2,351 | $1,438 | $939 | $1,275 | $1,827 | ||||
| SC | $1,650 | $979 | $1,459 | $1,294 | $1,089 | $1,422 | |||||
| SD | $1,682 | $706 | $943 | $1,298 | $827 | $1,446 | |||||
| TN | $1,777 | $970 | $1,464 | $1,141 | $895 | $1,090 | $1,200 | ||||
| TX | $2,488 | $1,303 | $1,908 | $1,493 | $1,109 | $1,745 | |||||
| UT | $1,442 | $906 | $1,154 | $1,174 | $1,269 | $1,266 | |||||
| VA | $1,277 | $859 | $1,061 | $754 | $785 | $947 | |||||
| VT | $1,759 | $469 | $954 | $2,233 | $1,079 | $1,289 | |||||
| WA | $1,415 | $922 | $866 | $746 | $858 | $1,042 | |||||
| WI | $1,521 | $766 | $2,797 | $1,158 | $721 | $1,265 | |||||
| WV | $2,000 | $1,030 | $1,288 | $1,362 | $979 | $1,513 | |||||
| WY | $1,918 | $1,369 | $1,017 | $1,366 | |||||||
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For example, the average rates for car insurance in Florida are almost double the average rates in the cheapest states for insurance coverage.
Average Insurance Costs by Credit Score
One major factor affecting what low-income drivers pay for their car insurance is their credit score. Poor credit scores and past debts indicate to insurance companies a higher likelihood of missed payments, making drivers with poor credit scores financially riskier to insure.
To see just how much poor credit scores can impact rates, take a look at the table below.
| Insurance Company | Rates with Poor Credit | Rates with Fair Credit | Rates with Good Credit |
|---|---|---|---|
| American Family | $203 | $136 | $116 |
| Farmers | $269 | $160 | $140 |
| GEICO | $148 | $99 | $82 |
| Liberty Mutual | $355 | $226 | $177 |
| Nationwide | $166 | $133 | $120 |
| Progressive | $206 | $138 | $109 |
| State Farm | $200 | $117 | $91 |
| Travelers | $194 | $128 | $107 |
| Allstate | $296 | $197 | $176 |
| Average | $226 | $148 | $123 |
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GEICO has some of the cheapest average rates for drivers with poor credit scores, costing thousands of dollars less than the average rate at companies like Liberty Mutual. For more information, check out our GEICO auto insurance review.
If you have a poor credit score, make sure to get quotes from the best auto insurance companies for drivers with bad credit to see if you can reduce your auto insurance rates.
Other Ways Low-Income Drivers Can Find Savings
Besides state assistance programs that provide cheap auto insurance for low-income drivers, there are still plenty of ways to lower your car insurance. From shopping around for quotes to applying for discounts, we’ve outlined our best tips to reduce car insurance rates below.
Choose the Credit Card Payment Method and Pay Monthly
Paying with a credit card for car insurance, rather than a direct deposit, means the money won’t be directly taken from your bank account. If you are switching car insurance companies, this also means that you will receive your refund quicker.
You should also pay in monthly installments rather than a lump sum, as it is easier to afford small amounts each month than paying in full. Just bear in mind that insurance companies often charge slightly more for monthly payments.
Shop For Insurance Quotes and Save them
For some drivers, switching to a new car insurance company can save them hundreds of dollars every year. Shopping around for quotes periodically to compare rates can help you continue to find the best car insurance for low-income budgets.
We recommend getting quotes every year to make sure you are still getting the best deal possible.
If you find a good deal but can’t currently afford it, most insurance companies will let you save your quote for a few months. This means that even if you purchase your policy a month later, you will still get the rates from your quote.
Consider Pay-Per-Mile Insurance
Pay-per-mile car insurance is a great option for drivers who drive less than 13,000 miles per year. Most pay-per-mile programs charge a daily set rate of a few dollars per day and an additional per-mile fee of a few cents.
So if you rarely drive, signing up with a pay-per-mile insurance policy could save you a significant amount of money on car insurance.
Apply For Car Insurance Discounts
While some auto insurance discounts are automatically applied to your insurance policy, you may have to apply for some discounts. For example, some insurance companies offer usage-based insurance discounts, which track your data for a few months and then issue a discount for safe driving.
Insurance companies may also offer defensive driving discounts if you complete an approved course and submit evidence of successful completion.
Because these types of discounts aren’t automatic unless the driver takes action, check your insurance company’s full list of discounts to make sure there aren’t any additional discounts you can apply for.
Buy an Inexpensive Car
Some cars are significantly cheaper to insure than others. It is best to purchase a car that has good safety features and cheap replacement parts. It will cost less to insure than an expensive car with costly, hard-to-find parts.
You can get quotes for the cars you are thinking of buying to see how much they would cost to insure.
Reduce Your Coverages
If your car is older and not worth much, you can drop collision insurance and comprehensive insurance if the total annual cost of these coverages would equal 10% of your car’s total value. You can also choose to reduce your coverage by increasing your car insurance deductible.
Just make sure you don’t increase your deductible too much. The rule of thumb is not to raise your deductible beyond what you can pay out of pocket. Otherwise, you may be unable to afford to fix your car after an accident.
Reduce Your Number of Owned Cars
If you have multiple cars, consider cutting back on the number of cars you own. More cars mean higher insurance rates, so selling one car could reduce insurance rates substantially and make car insurance for low-income individuals more affordable.
Why You Should Never Let Your Insurance Lapse
Drivers who are struggling to pay for car insurance may be tempted to let their car insurance lapse until they can afford payments again. This is a bad idea, as it comes with multiple financial repercussions if caught.
Not only will drivers face higher insurance rates for coverage lapses, but they also face fines, fees, and a suspended license. Instead of letting insurance lapse, follow the tips in the section above to reduce your auto insurance costs.
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The Final Word on Auto Insurance For Low-Income Drivers
There are a few states with programs to provide auto insurance for low-income drivers, but in all other states, drivers must work to reduce car insurance costs on their own. Shopping around for car insurance quotes, applying for discounts, and improving credit scores can help drivers reduce their costs.
To find the cheapest car insurance rates in your area, use our free quote comparison tool to compare auto insurance companies.
Frequently Asked Questions
How do I get government car insurance if I am a low-income driver?
You can apply for low-income car insurance only in Hawaii, New Jersey, and California.
Does Georgia have low-income car insurance?
No, Georgia does not have an assistance program that provides car insurance for low-income families.
Will income affect my car insurance?
No, your income will not affect your car insurance rates. However, if you have a bad credit score because of your limited income, this can affect your insurance rates.
How can drivers get car insurance if they can’t afford it?
Drivers should compare quotes and consider limited coverage insurance policies to afford car insurance.
What happens if drivers don’t pay for car insurance?
Insurance companies will drop drivers who can’t make payments. If you find yourself short on the next payment, contact your insurance company to see if you can work out a payment plan.
Can drivers get car insurance with no income?
Yes, as long as drivers have enough money saved to make the payments on car insurance.
Free Auto Insurance Comparison
Enter your ZIP code below to view companies that have cheap auto insurance rates.
Secured with SHA-256 Encryption
Editorial Guidelines: We are a free online resource for anyone interested in learning more about auto insurance. Our goal is to be an objective, third-party resource for everything auto insurance related. We update our site regularly, and all content is reviewed by auto insurance experts.
|
Written by
Rachel Bodine |
|
Reviewed by
Daniel Walker
|