How to Get Auto Insurance for Low-Income Individuals and Families?

Every driver in the United States must have auto insurance. There are no affordable auto insurance rates available for everyone, so it is clear that this is a problem. Many people search for low-income car insurance because they can’t afford groceries.

Only California, Hawaii, New Jersey, and New Jersey offer government-sponsored car insurance for those who cannot afford it. What about residents from other states? We can help you purchase Auto Insurance for Low-Income Individuals in the state that you live in.

This blog will cover almost all aspects of low-income insurance. Continue reading until the end.

Takeaways

  • Insurers do not consider income when determining the cost of car insurance
  • Some states offer assistance programs
  • Telematics might be a good choice for those who don’t drive as often.
  • You can save money by shopping for multiple quotes

Contents

Car insurance for low-income people

Individuals who earn less than $50,000 can get low-income auto insurance. Individuals and families can get car insurance that is funded by the government in some states. Low-income people can find affordable insurance by purchasing car insurance that offers equal pricing.

Since the mid-1900s, traffic laws and car insurance have improved tremendously. However, it comes with a steep price. Unfortunately, the most expensive premiums are often paid by those with less money.

Cheapest Car Insurance Companies for Low-Income Drivers by State

Low-income drivers have the best car insurance policies that meet the minimum liabilities requirements. Each state has its own coverage requirements, and so do the average cheapest insurance companies.

We, which excludes USAA, found that GEICO is the cheapest available minimum car insurance provider in most states. On average, it was the cheapest in 26 states. State Farm as well as Erie are also very affordable and rank among the best in seven and four states.

All eligible military families should request a quote from the insurer. We found that it is the cheapest overall insurer if you can obtain a policy. It also ranks among the lowest priced in 38 states.

LOW-INCOME DRIVERS (EXCLUDING USAA), CHEAPEST STATE BY STATE
State Company Annual Premium
Alabama GEICO $375
Alaska GEICO $453
Arizona GEICO $366
Arkansas GEICO $373
California Progressive $481
Colorado GEICO $373
Connecticut GEICO $470
Delaware State Farm $791
Florida GEICO $590
Georgia GEICO $722
Hawaii GEICO $333
Idaho State Farm $284
Illinois GEICO $366
Indiana Erie $290
Iowa GEICO $232
Kansas American Family $376
Kentucky State Farm $428
Louisiana Southern Farm Bureau $772
Maine GEICO $252
Maryland Erie $926
Massachusetts State Farm $323
Michigan Nationwide $977
Minnesota AAA $509
Mississippi GEICO $382
Missouri State Farm $438
Montana State Farm $338
Nebraska GEICO $307
Nevada GEICO $583
New Hampshire Amica Mutual $304
New Jersey GEICO $499
New Mexico MetLife $441
New York GEICO $1,092
North Carolina Nationwide $301
North Dakota Nodak Mutual $208
Ohio Erie $274
Oklahoma GEICO $401
Oregon GEICO $566
Pennsylvania GEICO $543
Rhode Island State Farm $430
South Carolina GEICO $470
South Dakota Farmers Mutual of Nebraska $257
Tennessee GEICO $369
Texas Farmers $420
Utah GEICO $393
Vermont Vermont Mutual $206
Virginia Progressive $333
Washington Progressive $442
Washington D.C. GEICO $352
West Virginia Erie $314
Wisconsin GEICO $311
Wyoming GEICO $206

Comprehensive and collision insurance is not included in state minimum policies. They only cover the cost of damage to your car. Although a complete coverage policy costs more, drivers with low incomes and valuable cars may be willing to pay the extra cost to get full coverage. Shop around for car insurance quotes to get the best deal.

Cheapest Car Insurance Companies for Low-Income Drivers Nationally

We calculated national averages of car insurance companies for low-income motorists looking for the best deals. USAA can be used if you’re eligible. Policies that meet the state minimums average $373 annually.

GEICO was the runner-up, with minimal coverage policies costing an average of $474 per year.

Low-income drivers have the opportunity to save money on car insurance by shopping around. Saving hundreds of dollars a year on car insurance can help you allocate more of your income for other purposes.

Cheapest Car Insurance Companies

What level of coverage do I need if I have a low income?

The cheapest option is to purchase the minimum amount of liability insurance required by your state. However, depending on the state you live in, your liability coverage might be very low. Most states will only cover $50,000 per accident in bodily injury liability costs.

Our data shows that businesses charge $100-200 more annually to cover liability risk. This is to raise your liability limits from the minimums set by the state to 50/100/100.

The cost of adding collision and comprehensive insurance (also known as a full-coverage policy) will increase. Companies typically charge $300 to $500 annually to add these coverages.

Although this will only be necessary if the car is financed or leased, many drivers may want to purchase it.

Collision and comprehensive insurance will cover your vehicle’s value if it is damaged in any way. When the premiums exceed 10%, we recommend that you drop collision and comprehensive.

If your car is valued at $5,000 by your insurance company and your deductible is $1,000, then you are paying $4,000 for coverage. You should drop coverage if your collision and comprehensive premiums exceed $400 or 10% of $4,000

Factors that Impact Car Insurance Rates

In determining your car insurance rates, income is not a consideration. Car insurance companies consider many factors that can be correlated with income. These include where you live and how much education you have.

Insurance rates will be affected by the type of car that you drive. Because these drivers take greater risks, high-performance, flashy sports cars can be more expensive to insure.

People with higher incomes are more likely to receive better rates because they can pay for the damage out of pocket. This means they don’t need to file claims for every accident. Lower premiums equal fewer claims.

Low-income drivers may have gaps in their insurance coverage. This can lead to higher rates. Insurance companies view people who have gaps in their coverage as high-risk because they believe you drove despite not having insurance.

Insurance companies also consider the following factors:

  • Vehicle
  • Zip code and state
  • Age
  • Gender
  • Marital status
  • Driving history
  • Insurance coverage before
  • History of Claims
  • Credit score (except in California and Massachusetts, Hawaii)
  • Average mileage
  • Type of coverage and deductibles

Does income affect your car insurance?

Your income does not affect how much car insurance you pay. It is more likely that your rates will be determined by factors like credit history, driving record, and address, depending on where you live.

What if I don’t have the funds to pay for car insurance?

First, check to see if there is a state-backed plan that is cheaper. California, New Jersey, and Hawaii all offer programs that assist low-income drivers to get coverage. Compare quotes from several companies to find more affordable options. This is possible with insurance comparison websites such as The Zebra.

What happens if your car insurance is not paid?

Customers who fail to pay their car insurance could be dropped by their insurer. Companies have different grace periods for late payments. You should not assume you can be late if you aren’t available. Contact your insurance company immediately if you are certain that you will not be able to pay your bill. You may be able to work out a deal with them to avoid paying penalties or losing your coverage.

Is it possible to get car insurance without having any income?

In order to determine how much insurance you pay, income is not an important factor. If an insurance company believes you are not able to pay your premiums, they might deny coverage. All companies require a down payment to start coverage.

Although this is sometimes called a “deposit”, it is really just the first month’s premium plus any additional fees that may be applicable to onboarding.

You may be able to get coverage even if you have no income. However, it can be more difficult to keep the coverage if you don’t have a steady income.

What is the Average Insurance Cost?

Your average cost of insurance will differ depending on where you live because each state has its own minimum requirements. Insurance companies do not consider your personal income when determining your average rate. However, the following factors are often considered:

  • Your vehicle’s make, model, mileage, and year.
  • Your age
  • Wherever you live
  • Credit score
  • Your driving record
  • Insurance claims for cars that were not insured before

The average car insurance premiums in the United States are examined by the National Association of Insurance Commissioners ( NAIC). Here are the national coverage costs.

State Liability Average Premium Collision Average Premium Comprehensive Average Premium Premium Combined
Alabama $511.13 $380.51 $175.28 $1,066.92
Alaska $576.09 $387.12 $147.87 $1,111.07
Arizona $646.75 $326.28 $208.25 $1,181.29
Arkansas $486.72 $375.25 $235.36 $1,097.33
California $616.51 $483.60 $94.72 $1,194.83
Colorado $687.40 $330.50 $272.44 $1,290.34
Connecticut $784.70 $407.54 $133.86 $1,326.09
Delaware $900.32 $352.86 $140.52 $1,393.70
District of Columbia $809.41 $535.96 $228.71 $1,574.09
Florida $1,009.94 $361.79 $149.26 $1,520.99
Georgia $797.80 $408.41 $176.31 $1,382.52
Hawaii $479.27 $357.78 $107.66 $944.70
Idaho $425.89 $262.67 $139.75 $828.32
Illinois $515.94 $339.04 $140.57 $995.55
Indiana $442.69 $286.49 $135.63 $864.82
Iowa $348.87 $252.65 $214.65 $816.18
Kansas $421.78 $287.24 $276.33 $985.34
Kentucky $611.54 $312.51 $164.68 $1,088.73
Louisiana $1,015.36 $487.44 $248.57 $1,751.37
Maine $374.59 $294.80 $113.33 $782.72
Maryland $737.73 $422.06 $167.61 $1,327.40
Massachusetts $658.47 $440.55 $147.06 $1,246.08
Michigan $952.15 $479.11 $159.08 $1,590.35
Minnesota $499.48 $265.74 $206.45 $971.66
Mississippi $538.35 $372.17 $239.34 $1,149.85
Missouri $520.45 $315.49 $216.92 $1,052.86
Montana $435.81 $283.65 $306.00 $1,025.46
Nebraska $429.35 $272.48 $260.97 $962.79
Nevada $900.40 $366.54 $119.28 $1,386.22
New Hampshire $436.76 $327.30 $118.58 $882.65
New Jersey $955.93 $414.39 $130.26 $1,500.58
New Mexico $576.81 $311.24 $214.10 $1,102.15
New York $920.25 $457.77 $180.64 $1,558.66
North Carolina $391.29 $342.13 $137.45 $870.87
North Dakota $307.97 $279.45 $256.76 $844.18
Ohio $448.59 $302.57 $130.74 $881.91
Oklahoma $508.89 $346.73 $267.99 $1,123.61
Oregon $689.74 $280.61 $106.87 $1,077.22
Pennsylvania $555.42 $376.21 $169.21 $1,100.84
Rhode Island $885.33 $474.58 $140.40 $1,500.31
South Carolina $702.37 $318.08 $207.09 $1,227.54
South Dakota $333.44 $244.47 $327.11 $905.02
Tennessee $477.07 $355.01 $163.83 $995.91
Texas $659.47 $442.88 $269.90 $1,372.25
Utah $601.77 $309.20 $127.53 $1,038.50
Vermont $376.99 $329.47 $147.81 $854.27
Virginia $492.68 $316.05 $148.25 $956.98
Washington $689.18 $312.65 $118.19 $1,120.02
West Virginia $521.74 $350.20 $224.86 $1,096.80
Wisconsin $422.28 $247.95 $159.82 $830.06
Wyoming $356.25 $297.61 $317.22 $971.07

You may feel that your insurance rates are increasing over the last few years. The NAIC tracks the changes in insurance premium prices year-over-year.

The average annual rate rose more than 20 percent between 2014 and 2018, with the exception being comprehensive coverage. Here are the NAIC’s findings.

Insurance premium Cumulative Changes from 2014 to 2018.
Annual liability premium +21.12%
Average collision premium +22.53%
Average comprehensive premium +17.13%
Premium combined +20.98%

What is low-income insurance?

If you have a low income and are thinking of buying a car, the problem is more than just getting money to buy it. This is a problem that affects most Americans. As per the report by the Census Bureau: In 2019, there were over 34 million Americans who fell under the low-income threshold.

It is clear that cars are a necessity for all and that car insurance is essential. With such a large population, a country must find affordable car insurance. This led to low-income car insurance terms.

It is for whom?

The low-income driver covers citizens whose family income is less than that set by the state. Each state uses its own method and algorithm to determine the income limit for its citizens.

What People With Low Incomes Can Do to Lower Their Car Insurance

Car insurance is required in most states. However, full coverage car insurance is expensive at $1,674 per year. Not everyone can afford it.

Insurance companies don’t consider income when determining premiums. You won’t pay more if your income is lower. You might actually pay more because of industry practices, which critics claim discriminate against those with lower incomes.

Nestor Hugo Solari is co-founder and CEO of Sigo. This auto insurance provider aims to reach Latinx and immigrants.

You might not be able to get the coverage that you need if you don’t have enough income to pay for car insurance. There are a few options for low-income car insurance depending on where you live. However, there is no federal option.

How do I find low-income car insurance?

NAIC reports that at least one motorist chooses to drive without insurance. These uninsured motorists can be caught in an accident, or are caught by police. This leaves them with huge medical bills and fines.
It can be difficult to find low-income insurance. Shopping around is the best way for low-income people to find affordable insurance.

There are many powerful search engines on the internet, including Google, Yahoo!, Bing, Yahoo!, and DuckDuckGo. You can use the power of the Internet to compare rates from different companies. To find out if there are any discounts, you can search the internet. Combining discounts with comparatively low rates can lead to a great deal.

Programs for low-income drivers that are covered by government-sponsored automobile insurance

Three states in the United States have created State-sponsored insurance options to help low-income families after recognizing the problems that poor people face. At the moment, this program is available only in California and New Jersey. Hawaii is not yet involved.

California’s Low-cost Auto Insurance Scheme, CLCA

CLCA was introduced for the first time in 1999. This program allows low-income families with a clean driving record to obtain liability insurance coverage in California.

CLCA drivers have lower insurance coverage than California’s minimum requirements. This program allows drivers to be exempted from California’s minimum insurance requirements.

The CLCA program allows a person to get two policies, i.e. insurance for up to two vehicles under their name. If a house has 2 qualified, good drivers, they can get insurance at a low income for 4 cars.

CLCA Eligibility Requirements:

1. Limit income for a Household Size
Household size Maximum Household Income
1 $30,350 annually
2 $41,150 annually
3 $51,950 annually
4 $62,750 annually
5 $73,550 annually
6 $84,350 per annum
  • California State drivers must possess a valid driver’s license.
  • The vehicle’s value should not exceed $ 25,000
  • The minimum age for a driver is 16
According to CLCA, the coverage limits for auto insurance are:
  1. $ 3,000 property damage liability
  2. $ 20,000 total bodily injury death in the event of multiple persons involved in an accident
  3. $ 10,000 per person for bodily injury or death

New Jersey’s Special Automobile Insurance Policy

New Jersey’s low-income insurance program covers only medical expenses. SAIP only covers the immediate treatment after the vehicle crashes. Its limit is $250,000. In the event of a fatal accident, there is a $10,000 death benefit.

These are the requirements for SAIP:

  1. Along with the hospitalization, the driver must be current in Federal Medicaid.
  2. A valid license must be valid. It should not be suspended, revoked, or canceled.

SAIP does NOT cover liability insurance, comprehensive or collision insurance. Only drivers who are qualified for the SAIP will be covered for medical expenses. Other members of the family must find an alternative insurance agency.

Low-Cost Disability Auto Insurance Program in Hawaii

The state of Hawaii has an Assistance to Aged, Blind, and Disabled program that allows residents to get car insurance. Auto insurance under the AABD program comes at no cost.

Eligibility to Hawaii’s Low-Cost Disability Auto Insurance Program

  1. A person must be at least 65 years old, legally blind, or permanently disabled.
  2. A person must be living with or taking care of someone who receives AABD benefits.

How much do Regular Car Insurance Costs for Low-income Drivers?

You will need to purchase a standard policy from an insurance company if you do not have access to state-sponsored low-income car insurance.

When calculating your rates, car insurance companies won’t consider your income. Your income is one of the major factors that will impact how much you pay for car insurance.

  • Age
  • Localization
  • Driving history
  • Coverage levels

If two drivers have very different incomes, but all other factors are the same, they would be able to pay roughly the same amount for car coverage.

Prices for car insurance vary widely from one state to the next. Below are the average monthly insurance prices for minimum coverage car insurance policies in all 50 states and Washington, D.C.

Car insurance pricing is also affected by credit scores. Poor credit scores can lead to higher car insurance prices for drivers. A low-income level can lead to higher insurance costs.

If you are a low-income driver, we recommend that you follow the savings tips below.

  • Can’t get state-sponsored car insurance
  • Are you paying more for car insurance per month than the average state price?

You may not be able to get car insurance that is cheaper than average due to your driving record, your location, or your age. However, there are still many steps you can take to reduce your monthly bills.

Drivers who are unable to get state-sponsored car insurance for any reason must purchase the standard insurance policy.

Insurance companies that do not take income into account when calculating car insurance rates will include factors such as driving record, location, age, and coverage level. These factors, even if the driver is trying to get minimum coverage, will impact the cost.

Additionally, car insurance rates can vary from one state to the next. Every state has its own regulations and rules for drivers, so the rates can vary.

The minimum insurance coverage rates for all US states are listed below

State Monthly Car Insurance Rates
Alabama $69
Alaska $45
Arizona $78
Arkansas $52
California $25
Colorado $88
Connecticut $97
Delaware $108
District of Columbia $107
Florida $220
Georgia $39
Hawaii $41
Idaho $48
Illinois $43
Indiana $45
Iowa $32
Kansas $52
Kentucky $109
Louisiana $115
Maine $39
Maryland $94
Massachusetts $51
Michigan $46
Minnesota $75
Mississippi $58
Missouri $65
Montana $55
Nebraska $48
Nevada $101
New Hampshire $52
New Jersey $92
New Mexico $54
New York $105
North Carolina $42
North Dakota $46
Ohio $47
Oklahoma $62
Oregon $90
Pennsylvania $49
Rhode Island $125
South Carolina $69
South Dakota $35
Tennessee $48
Texas $95
Utah $90
Vermont $48
Virginia $53
Washington $56
West Virginia $54
Wisconsin $43
Wyoming $41

There are many ways to save money on low-income driver’s insurance

Many states in the United States do not provide any government assistance to low-income drivers. These drivers have no other option than to look into the discounts available for low-income drivers. A few options are available to drivers who want low rates on their insurance:

1. Auto insurance with Pay-per Mile

Pay-per-mile policies are a good option if you don’t drive a lot and have less than 1000 monthly miles. Pay per mile policy is more affordable than all other types of insurance and it’s also less expensive for low-income drivers.

Insurance companies can quote you a vehicle premium using your monthly mileage. This policy is not available in every state. Before you spend your time and finalize this policy, make sure to check the availability in your state.

2. For every driver, there are common discounts

All car insurance agencies in the United States offer extra discounts for drivers who drive safely. This is done to encourage safety and responsibility while driving a car. Here are some discounts that you might be eligible for from your agency.

  1. A good driver discount: You can apply for a good driving discount if you have a clean driving history for at least three years. This discount is only available to drivers who have not been involved in an accident or received traffic tickets such as DUI, speeding tickets or DUI.
  2. Senior Driver: Drivers over 50 years old are considered senior and experienced drivers, hence they fall under the low-risk driver category.
  3. Excellent Students: Many states offer student discounts for students who score certain points on their SATs or High school graduation.
  4. Advance Payment: Having your premium paid in advance builds trust between you and the company. The company offers discounts for such drivers.

3. Low-Cost Auto Insurance is available for your Car

You will see a significant price difference when you compare an older sedan’s insurance rate with that of a new SUV. Insurance rates are usually cheaper for smaller cars, older vehicles, and those that have the most safety features.

A brand new car is not possible if you’re already low-income. Even if you do buy one, you won’t be able to pay the insurance premium.

4. Compare Compare and Compare

Comparing insurance rates from different carriers will not only help you find lower rates but also allow you to compare the plans of different agencies.

RateForce is a great website to compare rates from different companies. You can find all the top insurers and compare their rates to get the best rates. You only need to provide some basic information and get a price quote from various agencies for car insurance in your state.

How to Avoid letting your insurance lapse

It is common to consider canceling or skipping insurance coverage if you are in financial trouble. It is a dangerous idea that could lead to higher premiums.

Drivers who have been caught without insurance are charged very high insurance rates. Most insurance companies refuse to offer a policy to drivers who do not want the coverage. A high premium is required if a company offers insurance.

In the event of an accident, you will have to pay a large medical and repair bill. This will likely be less than your annual premium.

There are many states that prevent uninsured drivers from getting coverage from the at-fault driver.

Car insurance costs go up by a lot. If you have a lapse, it will be almost impossible to get affordable car insurance the next time.

A driver who has his insurance canceled falls under the high-risk driver category. Therefore, no company will want to cover him.

You might be able to save a few dollars by canceling your car insurance, but you may have to pay twice as much for the same policy in the future.

How can you avoid a Premium Lapse in your Insurance Policy?

There are several ways you can avoid paying your insurance premium.

Get Minimum Coverage Insurance

You can get a lower policy if you don’t plan on driving your car for the next few months and your vehicle will be parked in a garage. However, you should inform your insurance company when you get back on the road.

Take the Accountability

Two main reasons your car insurance can be canceled are driving tickets and non-payment. It is easy to know how much your annual premium will cost so you can save some money and not feel pressure. Also, drive safely to avoid a DUI or driving ticket.

What should you do if your car insurance is canceled?

Contact your Insurance Company or Agent

First, you must initiate the process for reinstatement. You must inform your insurance company and your agent about the lapse.

Reinstatement refers to the process of getting your insurance policy back. Your company may be able to reinstate your policy quickly if there are no records regarding previous lapses or recent multiple claims.

Register on the policy of a friend, family member, or colleague

To avoid insurance lapses, keep your ID like a driver registered under any insurance. Ask your family and friends to assist you. Include yourself in their policy.

Insurance Lapse Exceptions:

Did you know that there are some exceptions where you can allow a few lapses of judgment? Three cases are most notable:

  1. You are a young driver who has a new license.
  2. All military personnel.
  3. If you’ve had continuous motorcycle insurance.

Methodology

Our expert review team gathers data from many auto insurance providers in order to create rankings of the top insurers. Each company receives a score from each category, along with an overall weighted score of 5.0 stars.

  • Industry Standing Insurance companies with strong financial ratings, customer-first business practices, and high financial ratings receive the highest score in this category.
  • Availability We take into account availability by state and exclusions for certain groups of drivers.
  • Coverage This rating takes into account the types of insurance that are available, maximum coverage limits, and add-on policies.
  • Prices and discounts: We review the auto insurance rate estimates produced by Quadrant Information Services to a wide range of drivers across every state. The best scores are awarded to companies that offer car insurance discounts and have lower prices.
  • Customer Service We review customer feedback and reviews from J.D. Power.
  • Technology: Insurance companies that offer mobile apps, advanced online services, and telematics to their customers are more likely than others to be able to meet their needs.

Leave a Reply

Your email address will not be published.