Low income auto insurance for families and individuals
Fact-checked with HomeInsurance.com
Most people rely on a car to get themselves to work, school and around town. But if you have a car, you need to have insurance, which can be incredibly expensive. In the United States, the average cost of full coverage car insurance is $1,555 per year. If you live in a state like Florida or Michigan, you’ll pay well above the national average. Not all drivers can easily afford car insurance, but you can’t legally drive without it. Keep reading to learn how you can find auto insurance designed to fit within a low-income budget.
Cost of car insurance for low income drivers
Low income drivers may struggle to find affordable car insurance through a private provider. These insurance companies are in the business of making money, and unfortunately, there’s not much they can do if you can’t afford a standard policy. Regardless of your income level, there are a number of factors that influence your car insurance rate, including:
- State and zipcode
- Driving record
- Credit score
- Claims history
- The make/model of your car
- The age of your car
Although the average cost of car insurance is around $1,500, you could pay more or less based on where you live. In the table below, we’ve outlined the average monthly cost for minimum coverage car insurance in all 50 states based on Quadrant data findings.
The most expensive states for car insurance are New York ($108), Michigan ($102), Florida ($79), and New Jersey ($76). All four states are no-fault states, which means drivers are required to carry a higher amount of car insurance than in other places. Additionally, these states all have a large number of drivers, which ultimately means there is more risk on the road.
On the other hand, the least expensive states for car insurance are Wyoming ($22), Iowa ($23), Vermont ($26), South Dakota ($26), Montana ($26), and Maine ($26). These states are fault states, which means drivers carry less car insurance. Most have a small number of uninsured drivers, and places like Vermont and Montana have fewer-than-average drivers overall.
|State||Average Monthly Cost|
|District of Columbia||$56|
Quadrant information services, 2020
State-sponsored insurance options for low-income families
A few states offer insurance plans specifically for low-income individuals and families. If you live in Hawaii, New Jersey, California, or Maryland, you can purchase low-cost car insurance from a state-run organization.
The Special Automobile Insurance Policy
Drivers in New Jersey can take advantage of The Special Automobile Insurance Policy (SAIP). To qualify for the program, drivers must be enrolled in federal Medicaid with hospitalization. The policy costs $360 per year if you pay upfront, or $365 if you pay in two installments.
California Low Cost Auto Insurance Program
Some low-income California residents are eligible for the Low Cost Auto Insurance Program (CLCA). To qualify, you must have a valid California driver’s license, own a car valued at $25,000 or less, be at least 16 years old, have a good driving record, and meet the income requirements.
Assistance to the Aged, Blind and Disabled Program
Hawaii offers the Assistance to the Aged, Blind and Disabled Program (AABD). This program is specifically for Hawaii residents age 65 or older who are permanently disabled, blind, or don’t qualify for Social Security benefits. In addition to insurance, it also provides cash for food, clothing, housing, and other essentials. To qualify, residents must have a countable income below 34% of the 2006 Federal Poverty Level, and not be receiving aid that is more than $2,000 for a single person and $3,000 for a couple.
The Maryland Auto Insurance Fund
Low-income Maryland residents can take advantage of The Maryland Auto Insurance Fund (MAIF), also called Maryland Auto Insurance. The program is available to any Maryland driver who can’t get car insurance through a private provider. There are no strict qualifications, and you can even get a price quote online.
Other ways for low-income drivers and families to save on car insurance
“If you’re struggling to pay for car insurance, there are some solutions to make it more affordable. Before you cancel or default on your policy, contact your insurer to discuss ways to decrease your premiums.”-Laura Adams, Insurance Expert
Take advantage of discounts and savings programs
Make sure you’re taking advantage of all the discounts and savings programs available to you.
Adams states, “Options may include government subsidies, temporary forbearance, military or occupation discounts, increasing deductibles, decreasing your coverage types or amounts, and bundling policies.”
You can also contact your state’s department of insurance to find out if you qualify for any assistance programs.
“The available financial assistance depends on the state, county, or city where you live. It may also depend on your income, age, and family size,” says Adams.
Choose a pay-per-mile policy
Depending on how often you drive, choosing a pay-per-mile or usage-based insurance policy might keep your cost lower. Instead of paying a flat annual or monthly rate, a pay-per-mile policy charges you for the distance you drive, plus a small base fee. You can purchase pay-per-mile insurance through Metromile, Nationwide, Allstate and a few other companies.
Shop around for a better price
If all else fails, you can always shop around for a better rate. In addition to finding a lower premium, look for an insurance company that offers more discounts that you can take advantage of. Some providers will even give you a discount for simply switching from another provider. If you get a lower quote than what you’re currently paying, you might be able to use it as leverage to negotiate a cheaper rate with your existing provider.
Raise your credit score
There is a long list of factors that contribute to your car insurance premium, but your credit score can be one of the most important ones. Drivers with a poor credit score are considered high-risk, which means they pay a higher rate. Improving your credit score is one of the most effective ways to save money on your car insurance.
- Car insurance can be pricey, but there are options for low-cost individuals and families.
- Look into state-subsidized insurance programs and take advantage of discounts.
- Shopping around, buying pay-per-mile insurance and raising your credit score can also lower your rate.
Finding affordable car insurance isn’t always easy, but if you can take advantage of state assistance programs or discounts, that will lower your rate. Even if you’re struggling to afford your insurance policy, don’t be tempted to cancel it.
“Don’t risk driving without auto insurance. It’s illegal to drive without some minimum amount of auto coverage in every state. Plus, getting into an accident could damage your finances even more if you get caught uninsured,” says Adams.
Coverage Utilizes Quadrant Information Services to analyse quoted rates from thousands of zip codes across all 50 states, using the top 15 carriers by premiums written by state. Quoted rates are based around the profiles of a 30 year male and female with a clean driving record, and good credit.
Minimum coverages were applied to match state requirements. Both drivers used a new, financed 2018 Toyota Camry, commuting 5 days a week and driving 12,000 miles per year.
These rates were publicly sourced from insurer filings and should be used for comparative purposes only – your own quotes may be different.