Forty-nine out of the 50 states in the U.S. require drivers to carry active car 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 $1,251 in 2019, 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 low income car insurance can be difficult. Not only are these drivers working with limited funds, they’re also fighting an industry trend of charging more for car 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 low cost car insurance programs out there to help find the cheapest car insurance for low income drivers.
What is low income car insurance?
Before we proceed, let’s make sure we’re on the same page about what low income car insurance is: it’s low cost 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 cheap full coverage car insurance.
How to find low income car insurance savings
Let’s take a look at the states that offer low-income car insurance programs. If you live outside of these states, don’t worry. There are other ways you can save on your car insurance premiums that we have included below. 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.
Participate in State-Low Income Car Insurance Programs
A handful of states have government-sponsored programs to help low-income families afford cheap full coverage car insurance. Hawaii, California, Maryland and New Jersey offer government-sponsored car 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.
- 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 car 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 car 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 $30,000 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, car 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. Your resources must also be valued at less than $2,000 for an individual or $3,000 for a couple. 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 car insurance will be provided free of charge.
Try a Usage-Based Insurance Company
Usage-based car insurance (UBI) is determined based on your driving behaviors and miles driven. Powered by vehicle installed devices, plug-in devices, or even mobile apps, this type of insurance allows the carrier to monitor your driving habits and best align your premium with your actions while behind the wheel. Actions monitored include the number of miles driven, the time of day you drive, where you drive the vehicle (tracked via Global Positioning System or GPS) and whether you employ rapid acceleration, hard braking, hard cornering or airbag use.
- Progressive offers a UBI program called Snapshot, which rewards drivers with savings that average up to $145. Under Snapshot, Progressive monitors driving location, hard braking, fast acceleration, and phone usage. The program also provides tips to keep you safe and help keep your insurance rates low.
- The Allstate Drivewise program is another usage-based insurance option. Like Progressive, Allstate provides personalized driver feedback to help show drivers how to employ better driving practices that keep insurance costs low. Drivers can earn cashback and rewards points by doing things like staying under 80 mph, taking fewer late-night trips and keeping hard braking to a minimum.
All car insurance providers are not created equally. Therefore, it is essential to shop around and compare quotes among all of the car insurance carriers available to you if you want to find the best cheap car insurance.
Take a defensive driver course
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.
Improve your credit score
Because a insurance providers argue that drivers with lower credit scores pose a greater risk of being involved in motor vehicle incidents, your credit history can play a role in determining how much your car insurance premium will be. Lower your insurance costs by working on rebuilding your credit score. Start by paying off outstanding debts and staying within your monthly spending budget. Check your credit report and report any discrepancies you find that may be inaccurate.
Bundle your insurance policies
Most car insurance providers offer some type of multi-policy discount to incentivize bundling their services. You can qualify for car insurance deductions by adding on another vehicle policy, or other types of insurance plans like homeowners, rental or life insurance.
Take advantage of other discounts
- 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.
Frequently asked questions
What is the cheapest car to insure?
The cheapest vehicle to insure is currently the Honda Odyssey LX, a minivan popular with families, who typically operate vehicles more carefully and pose less risk of vehicle incidents. Discover other vehicles that are cheap to insure.
Where can I buy low cost car insurance?
You have several options when purchasing low cost car insurance. Begin by shopping around online, calling a local representative or visiting a local branch of car insurance providers in your area. Compare discount programs different carriers offer, and then purchase your new insurance policy through the web, over the telephone or in-person.
Am I required to carry car insurance?
Unless you live in New Hampshire, where drivers are only required to bear financial responsibility for damages incurred in an accident, all drivers in the United States are required to carry minimum liability coverage in order to operate a vehicle.