Most states require drivers to buy at least some car insurance that includes bodily injury liability and property damage liability coverages. But meeting those requirements can be tough no matter what your financial situation is.
While there's no such thing as low income car insurance, there are steps that low-income drivers can take to lower their insurance rates.
This article covers everything buyers need to know about low income car insurance, including:
- Best car insurance companies for low-income drivers
- Discounts that can help with car insurance payments
- Government programs that offer car insurance help to low-income drivers
- Low income auto insurance for seniors
- Cheap liability insurance and how it can assist drivers with low incomes
Cheapest auto insurance for low-income drivers
Finding cheap car insurance can help low-income drivers save on insurance. Rates vary widely among insurers, so be sure to shop around for the cheapest rates.
Below are some quotes from the cheapest car insurance companies.
| Company | Annual minimum coverage | Annual full coverage |
|---|---|---|
| Erie | $371 | $780 |
| USAA | $387 | $795 |
| GEICO | $506 | $1,036 |
| American Family | $554 | $991 |
| State Farm | $556 | $1,034 |
| Country Financial | $596 | $1,183 |
| Travelers | $649 | $1,200 |
| Progressive | $673 | $1,226 |
| Allstate | $734 | $1,653 |
| Farmers | $747 | $1,460 |
| Metropolitan | $906 | $1,596 |
| Nationwide | $929 | $1,428 |
| Esurance | $940 | $1,418 |
| Average rates are based on non-binding estimates by Quadrant Information Services. Your rates may vary. | ||
Your own rates may vary from the ones in the chart above. Insurers consider the state you live in, your age, your driving record and credit score when determining your rates. Shopping around and comparing rates are critical if you want to get extensive coverage and the best deal.
If you're still looking to lower your car insurance rates, there are measures you can take to save on car insurance.
How low-income drivers can reduce their car insurance rates
There are many ways you can save on car insurance. Here are some ideas:
- Consider the type of car you drive. The model you drive impacts your car insurance rates. That's because car insurance companies look at a vehicle's chances of theft, repair costs, price, accident rate and safety rating when determining rates.
- Improve your credit score. Many auto insurance companies consider your credit score to help them decide your chances of filing a claim. To improve your credit score, make sure to pay bills on time.
- Keep a clean driving record. People with bad driving records tend to have significantly higher insurance rates.
- Discounts. Car insurance companies offer different types of discounts that you can take advantage of. We've included the types of discounts and their details below.
- State programs. Some states offer low income car insurance. We'll discuss these programs in detail below.
Discounts on car insurance with a low income
Every insurance company offers different car insurance discounts. In order to make sure you're taking advantage of all the discounts available to you, browse through the discounts below to find out what you're eligible for.
Bundling
Bundling refers to buying more than one insurance product from the same company. Insurance companies offer these bundling discounts to get you to purchase multiple products from them. Depending on the insurer, bundling policies can help you save up to 25% in premiums.
Defensive driver discount
If you have completed a defensive driving course, you may be eligible for a discount. Defensive driving classes help drivers learn how to drive safely and reduce their risks on the road. If you take one of these courses, you may be eligible for a 5% to 20% discount on your car insurance.
Good driver discount
A good driver discount is typically earned by drivers who don't have any accidents and have a clean driving record for a certain number of years. GEICO, Progressive and Travelers all offer discounts of 20% or more to good drivers.
Low-mileage discount
Low-mileage auto insurance is for people who don't drive too often. You may need to let your insurer monitor how many miles you drive in a year in order to get a low-mileage car insurance discount. Most insurance companies require you to drive anywhere less than the national average of 12,000 miles per year to qualify for the discount.
Multi-car discount
If you have multiple vehicles in your household, insurance companies may offer a multi-car insurance discount if all of your cars are covered by the same company. You may receive a 10% to 25% discount on your annual premium depending on the insurer.
Good student discounts
Many car insurance companies offer a good student discount.State Farm, for example, offers a good student discount up to 25%. Students must prove that they're full-time students and have a grade point average of at least 3.0 in order to qualify.
Car insurance discounts by profession
Drivers with certain jobs may get lower car insurance rates. For instance, certain insurers offer car insurance discounts to teachers and nurses. If you're a medical professional or a teacher, you may be eligible for a discount.
Government car insurance for low-income drivers
Some states have programs that offer car insurance help to low income individuals and families. California, New Jersey and Maryland have implemented low income car insurance programs to make car insurance more affordable.
California's Low Cost Auto Insurance Program
If you can't afford car insurance costs, you might qualify for California's Low Cost Auto Insurance program. To qualify for California's low income auto insurance, you must meet certain requirements:
- Hold a current California driver's license.
- Have an automobile worth $25,000 or less.
- Have a good driving record.
Before considering California's Low Cost Auto Insurance program, keep in mind that the program offers minimum liability coverage but you would have enough coverage to drive legally. Coverage limits include:
- Up to $10,000 for bodily injury per person.
- Up to $20,000 for bodily injury per claim.
- Up to $3,000 for property damage.
New Jersey's Special Automobile Insurance Policy
New Jersey's Special Automobile Insurance Policy only provides medical coverage after a car accident.
This program pays for emergency medical treatment after an accident, including the treatment of serious brain and spinal injuries, up to $250,000. In the case of your death from a car accident, a $10,000 benefit would be provided.
To qualify for the insurance policy in New Jersey, you must be enrolled in Federal Medicaid with hospitalization. You can secure a SAIP policy for $365 a year.
Maryland's Automobile Insurance Fund
The Maryland Automobile Insurance Fund provides liability, uninsured motorist, PIP and more to residents who are unable to obtain automobile insurance from car insurance companies in the private market. It caters to residents with a canceled policy or who have been denied coverage from two or more insurers.
Low income car insurance for seniors
There are certain car insurance perks that low-income senior drivers can take advantage of.
The Hartford, for instance, offers car insurance discounts to AARP members. Members can get up to 10% off their insurance premiums. To be eligible for the program, you must be over 50 years old and be a registered AARP member.
Farmers also offers a mature driver discount to eligible customers. You would have to complete a Driver's Education course approved by the Department of Motor Vehicles and need to be over 65 years old, or 55 in certain states.
Buying liability-only car insurance for low-income drivers
Another way you can lower your car insurance premiums as a low-income driver is to buy the minimum amount of liability coverage your state requires. Buying a cheap liability car insurance policy is the most affordable option to stay insured. If you already have full-coverage car insurance, consider reducing or removing the collision and comprehensive portions of your policy.
Sticking to just liability coverage can save you quite a bit of money. According to our research, the average cost of full-coverage car insurance is $1,255 per year. The national average for a car insurance policy with only liability coverage is $708 per year. That means a liability-only policy could cost you 44% less than one with full coverage. Of course, what you pay for a full-coverage or liability-only policy depends on a number of factors, including your age, gender and where you live.
If you decide to drop full-coverage car insurance, consider the added risks of a liability-only car insurance. This type of car insurance would not cover you if your vehicle is damaged or stolen.
Your coverage impacts your rates
Find out how much money you can save on auto insurance with different coverages
Don't cancel your car insurance to save money as a low-income driver
One thing you should not do to save money in an attempt to get low income auto insurance is drop your current coverage. If you don't buy another policy right away, you'll have a lapse in coverage. Car insurance lapses can cause all kinds of problems and be costly, too.
For example, many insurance companies may charge you higher rates when you buy coverage again after a lapse. When QuoteWizard looked into how three companies penalized car insurance lapses, one raised our sample driver's rates by 45%.
Continuing to drive uninsured could be even worse. If your state finds out, it might:
- Fine you.
- Suspend your license.
- Take away your license plates.
- Require you to file an SR-22.
Those possible penalties may be a drop in the bucket compared to what can happen if you get into an accident as an uninsured driver. If you cause a crash without car insurance, you might have to pay someone else's medical expenses, legal fees or property-damage bills out of pocket.
Bottom line
Car insurance companies may not sell low income policies, but that doesn't mean drivers with low incomes should give up on finding affordable auto coverage.
To find it for yourself, start by seeing if your state has a program that helps low income individuals and families get auto insurance. If it doesn't, shop around to find an insurance company that will give you the best rate for the coverage you need. Look into discounts that might lower your premiums. And if all else fails, consider cutting back to just liability coverage.
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