Forty-nine out of the 50 states in the US require drivers to carry active auto insurance policies, which means if you operate or own a car, you’re likely shelling out hundreds, if not thousands of dollars each year for insurance premiums.The average insurance cost for medium sedans was $1,232 in 2018, according to the Insurance Information Institute, and it can be much higher depending on the state and the driver. Even on the low end, the cost of car insurance can stretch your budget to its max.
Finding car insurance for low income drivers can be difficult. Not only are these drivers working with limited funds, they’re also fighting an industry trend of charging more for auto insurance to low- to moderate-income drivers with clean records than higher-income drivers with a few blemishes on their driving records. Luckily, there are some tips, tricks and even a few state-sponsored auto insurance programs out there to help find affordable car insurance for low income drivers.
What is low income car insurance, and more importantly, how do you get it?
Before we proceed, let’s make sure we’re on the same page about what low income car insurance is: it’s car insurance for people who have a low income. This type of insurance is important because it can be a challenge to find the funds for car insurance when you’re on a shoestring budget. Fortunately, a handful of states have government-sponsored programs to help low-income families afford car insurance.
Hawaii, California, Maryland and New Jersey offer government-sponsored auto insurance for low-income individuals. If you live in one of these states and are low income, you may qualify for a low-income car insurance program. Let’s take a look at each one.
- California: If you’re a low-income resident of California, you may qualify for the Low Cost Auto Insurance Program, or CLCA. The program was put in place to help income-eligible individuals afford auto insurance, per California’s standards, and each policy provides liability coverage for the vehicle’s primary driver and eligible secondary drivers. To qualify, you must be a California resident, meet the eligibility requirements, have a car that’s valued under $25,000 and be at least 16 years old. You can find more information on the specific requirements, along with rates and other information, on the CLCA website.
- New Jersey: The Special Automobile Insurance Policy, or SAIP, is New Jersey’s low-income car insurance program. New Jersey rolled out the initiative to help drivers who would otherwise be unable to afford auto insurance due to limited financial resources. You must be enrolled in federal Medicaid with hospitalization to qualify for the program, but if you’re eligible, this program is probably worth it, because the cost of insurance per year is just $365, or $360 if you pay all of it upfront. The policy covers a limit of one car per policy, and will take care of the emergency treatment you may need right after an accident. It also covers serious brain and spinal cord injuries up to $250,000 and a $10,000 death benefit.
- Maryland: The Maryland Auto Insurance Fund, or MAIF, is a program available to low-income drivers in Maryland, and it can be a great option for residents of Maryland who can’t obtain car insurance through regular means. The cool thing about this public option is that it’s open to anyone who has been turned down or canceled by traditional insurance companies, and it offers a policy with at least $20,000 per person bodily injury coverage and at least $15,000 in property damage.
- Hawaii: If you’re a resident of Hawaii and are shopping for car insurance with low income, you may qualify for low cost insurance through the state’s Assistance to the Aged, Blind and Disabled Program, or AABD. This initiative was put in place to help low-income Hawaii residents obtain necessities, like shelter, clothing, food, and in this case, auto insurance. To qualify for the program, you must be 65 or older, legally blind or permanently disabled, and be able to show proof that your income is below 34% of the current Federal Poverty Level. The program isn’t as limited as it sounds, though; the benefits are also open to caregivers who live with or take care of someone who receives assistance through AABD. If you or a person in your care qualifies, your auto insurance will be provided free of charge.
Other common ways to save on car insurance
If you live outside of Hawaii, Maryland, New Jersey or California, don’t worry. There are ways you can save on your auto insurance premiums. There are plenty of insurance discounts available to the average consumer, and you can ease the burden of that insurance bill by figuring out what discounts you qualify for.
Let’s take a look at the different discounts you may be able to take advantage of.
- Customer loyalty discounts: Are you bundling your car insurance, renewing your policy early or have multiple cars on the same policy? If so, you may qualify for a customer loyalty discount, which many car insurance companies offer.
- Demographic-related discounts: If you’re a student, a homeowner or a senior, there’s a good chance you can get some dollars knocked off of your premium.
- Special groups: Are you a current or former member of the military? A first responder? Are you associated with any special groups, like AAA or another roadside assistance company? If so, you should ask your insurance company about potential discounts they may offer.
- Mileage or low-use discounts: Perhaps you only drive to and from work, or you have a second car that’s used only for work purposes, like a truck that’s used only on a farm. If you’re a driver who uses your vehicle on a limited basis, you likely qualify for a discount on your car insurance, so be sure to ask.
- Good driver discounts: No accidents and no tickets? First of all, good job, and second of all, you may qualify for a good driver discount. Car insurance companies like drivers who have solid driving records, so you may be able to save some serious cash with this one.
- Defensive driver discounts: If you’ve recently taken a defensive driving class or another driver training course, you should ask your insurance provider if you qualify for a defensive driver discount.
- Payment-related discounts: Do you always use auto-pay for your bills? Are you going to pay for your full year’s policy up front? Do you plan on going paperless and only receiving your bills via email or app? If you answered yes to any of those questions, there are a ton of insurance companies that will give you a discount.
- Extra safety features: If you have an anti-theft car alarm, use a steering wheel or tire lock or have other theft-deterring devices on your car, you may qualify for a discount on your insurance. Same goes for other safety features, like airbags and motorized seat belts, as well as green vehicles, like hybrid or electric cars.
Cheapest car insurance
Perhaps you want to couple those discounts with the cheapest auto insurance you can find. There are a number of cheap options out there for you, but it will all depend on the type of coverage you want. Liability only insurance, which covers damage you cause to other vehicles but doesn’t cover damage to your car, is the cheapest way to go, but it can cost more in repairs if you cause an accident. According to a recent study by U,S. News, the cheapest car insurance companies for 2019 are:
- USAA is the cheapest option out there, according to the U.S. News report. There is one caveat, though, and it’s a big one: you have to be a member of USAA to qualify for their insurance. You can find more information on if you qualify and how you can become a member on the USAA site.
- Geico is the second-cheapest insurance option according to U.S. News. And, if you have a teen driver on your policy, you should probably consider Geico. They offer steep discounts for teenagers, which is certainly not the norm.
- State Farm comes in at third place for the cheapest car insurance, according to U.S. News’ data, with annual rates of $3,260 for all driver profiles in their study. That’s pretty low compared to most insurance companies, especially when you take into account that’s averaging all drivers across the spectrum: accident-prone drivers, teens and safe drivers, among others.