How to Get Low-Income Car Insurance

Low-income car insurance strategies include using government insurance programs, adjusting your coverage, and joining someone else’s policy.

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Updated May 13, 2024
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If you have a low income, car insurance might not seem affordable. But because car insurance is required in most states, you’re going to need some if you want to drive.

Rather than run the risk of driving illegally — and potentially paying big fines or having your license suspended — consider ways to afford car insurance with a low income. This could include using a low-income car insurance program, decreasing your amount of coverage, or getting pay-per-mile insurance if you don’t drive much.

Let’s dig into the details of car insurance costs and options for low-income car insurance to see whether you can save money on your rates.

In this article

Car insurance costs

These are the countrywide average annual car insurance premiums for common types of coverage according to the National Association of Insurance Commissioners:

  • Liability coverage: $650.53 per year
  • Collision coverage: $381.43 per year
  • Comprehensive coverage: $171.87 per year

With all three coverages combined, often called full coverage, you get an average cost of about $1,200 per year. The actual amount varies by state, but you can expect a range of around $800 to nearly $1,800 per year for a combined average of all three coverages.

That range works out to about $66 to $150 per month, which is a significant amount. For someone working a full-time minimum wage job, that’s a huge cut out of your monthly earnings.

Working 40 hours a week at $7.25 per hour (federal minimum wage) nets you $1,160 per month before taxes and other expenses, including rent, utilities, groceries, and gas. In this type of situation, would you want to worry about nearly 6% to 13% of your pre-tax income going toward car insurance?

Of course not, which is why it’s important to understand how car insurance rates work and how you can help lower your premiums.

Factors that affect car insurance rates

Multiple factors affect car insurance rates, including:

  • Your driving history
  • Where you live
  • Your age
  • Your gender
  • The type of vehicle you drive
  • How much you drive
  • Your credit history
  • How much coverage you choose


You can’t control some of these factors, such as your age. But you typically have some control over a few of the factors. For example, you get to choose your coverage limits. Higher limits and lower deductibles could mean more financial protection for you in the event of an accident, but they also typically mean higher premiums.

And if you want to help lower your rates, do your best to maintain a good driving record. This often means driving defensively to help decrease the risk of accidents and traffic violations.

Consider taking a defensive driving course if you want to brush up on driving laws and defensive driving techniques. This type of course might also qualify you for a discount depending on your car insurance company.


How to get low-income car insurance

Insurance is often expensive, but you typically need auto insurance if you plan on driving a vehicle. Otherwise, you could face hefty fines, have your license suspended, or potentially go to jail.

Here are nine ways to help make car insurance more affordable:

1. Opt for state minimum coverage

Most states require a minimum amount of liability coverage, which typically includes bodily injury liability and property damage liability. Some states might also require a minimum amount of personal injury protection or uninsured motorist/underinsured motorist coverage.

For example, here are the minimum car insurance requirements in California, Florida, and New York:

California Florida New York
Minimum liability insurance
  • $15,000 bodily injury per person
  • $30,000 bodily injury per accident
  • $5,000 property damage per accident
  • $10,000 property damage per accident
  • $25,000 bodily injury per person
  • $50,000 bodily injury per accident
  • $10,000 property damage per accident
Additional requirements
  • None
  • $10,000 personal injury protection
  • $25,000 uninsured/underinsured motorist bodily injury per person
  • $50,000 uninsured/underinsured motorist bodily injury per accident
  • $50,000 personal injury protection

You’ll notice that states don’t typically require collision or comprehensive insurance. And the liability requirements are often quite low. You could save money by opting for less coverage and lower limits.

But keep in mind that car accidents can get quite expensive. Not having enough coverage could mean being on the hook for a lot more money than what you might save on your premiums. Finding a balance between sufficient coverage and affordable auto insurance rates could be a smarter strategy.

2. Look into government car insurance programs

A few states have auto insurance programs to help low-income drivers afford car insurance.

California

California’s Low Cost Auto Insurance (CLCA) program helps certain California residents with affordable car insurance. This program is available if you:

  • Are at least 16
  • Have a valid California driver’s license
  • Are a new driver or have a clean driving record
  • Own a vehicle worth $25,000 or less
  • Meet income requirements

Hawaii

Hawaii provides no-fault auto insurance at no cost for individuals who meet specific requirements. This includes:

  • Receiving or having received certain public assistance benefits
  • Having a valid driver’s license or being an unlicensed permanently disabled individual who can’t drive
  • Being the registered owner of the applicable vehicle

New Jersey

The Special Automobile Insurance Policy (SAIP) is available to people who are enrolled in federal Medicaid with hospitalization. Eligibility isn’t available to all Medicaid participants. This policy costs up to $365 per year.

3. Review non-government programs

Some states also have non-government programs for low-income drivers. It could take some digging to see whether anything is available in your area, but the savings could be worth it.

Here are two examples of non-government programs that might provide more affordable car insurance rates:

  1. CURE Auto Insurance: CURE is based out of New Jersey and focuses on giving people fair rates that are based on driving records rather than their education, jobs, or credit.
  2. Maryland Auto Insurance: Maryland Auto is based out of Maryland and aims to provide car insurance to Maryland residents who might not be able to afford insurance from other companies.

4. Consider usage-based coverage

If you don’t drive a lot, a usage-based car insurance program could make sense. These types of programs are often referred to as “pay-per-mile” because your rates are based on how much you drive.

According to Metromile, a pay-per-mile program, the average savings of new Metromile customers was between $541 to $947 per year.

Examples of pay-per-mile car insurance programs include:

  • Metromile
  • Milewise (Allstate)
  • Mile Auto
  • SmartMiles (Nationwide)

5. Use discounts

The online car insurance quote process for many insurance companies will automatically apply certain discounts as you answer questions and fill in your information. But it doesn’t hurt to check all the available car insurance discounts on a company’s website or over the phone with an insurance agent to make sure you’re not missing out.

For example, bundling policies together from the same company typically gives you a discount. That could mean having a car insurance policy along with a home insurance policy or something similar.

Other common discounts include:

  • Multiple vehicle
  • Good student
  • Homeowner
  • Military
  • Safety features
  • Government employee
  • Safe driver
  • Good driver

6. Maintain a clean driving record

One of the biggest factors that affects your auto insurance rates is your driving record. This includes any car accidents you’ve had in the past three to five years as well as violations and convictions.

It’s unfortunate, but any type of accident could increase your rates, whether it’s your fault or not. But at-fault accidents typically have more of a negative impact.

If you want to help keep your rates low, drive as safely as possible. You can’t control other drivers, but you can do your best not to cause an accident yourself.

7. Improve your credit score

Many insurance companies use your insurance score to predict whether you’re more likely to file a claim. Your insurance score is often based on your credit score and gives a general overview of how you manage your money. This score isn’t based on your income level.

Because there’s a connection between the two types of scores, it’s in your best interests to improve your credit score if you want a better insurance score. Doing this could result in better rates from insurance providers.

8. Join someone else’s policy

As a young driver or someone with a poor driving record, you might get lower rates by joining someone else’s auto insurance policy. This could be true if the other person has a clean driving record and isn’t considered a high-risk driver, such as a teenager or a new driver.

Keep in mind that your inclusion on a policy could cause the overall rates to spike for everyone on the policy. So you might have to figure out a fair compromise on sharing the price with any other parties.

9. Compare rates between providers

The method of comparing rates between all available providers in your area is a tried-and-true strategy for finding the cheapest car insurance coverage. This typically involves checking individual company websites or talking to agents from each insurer.

Or you could use a car insurance comparison website to quickly find everything that’s available in your area to find the least expensive option.

FAQs

What happens if you can’t afford car insurance anymore?

You can’t legally drive if you don’t have car insurance in most states or if you can’t provide sufficient financial responsibility for an at-fault accident in New Hampshire. But if you can’t afford car insurance and want to keep driving, consider ways to make rates more affordable. This could include using low-income programs, discounts, or pay-per-mile programs.

Who has the lowest insurance for new drivers?

It varies by location. There’s no way of knowing which insurance company might have the lowest rates in your area until you check. Comparing rates is often an easy way to quickly see what coverage is available and how much it costs. Keep in mind that car insurance rates are generally higher for young drivers.

What does it mean to have a clean driving record?

A clean driving record has no recent violations, accidents, or convictions. This often means not having one of these infractions on your motor vehicle record in the past three to five years, but it might be longer for more serious charges, such as a DUI. Violations typically fall off your record after a few years, though it varies by state.

Bottom line

Low-income car insurance, or car insurance you can afford with a low income, isn’t a myth. A few states have government car insurance programs, but you can also look into similar non-government programs.

Other options to help make car insurance more affordable include using discounts, decreasing your coverage limits, maintaining a clean driving record, and using a pay-per-mile program. And if all else fails, it might be worth looking into public transportation, carpooling, or other methods of travel to get around.

Keep in mind that a quick comparison of car insurance rates could help you almost immediately lower your premiums. Use our page on the best car insurance to compare coverage in your area.

  • You could save up to $500 with some companies
  • Compare dozens of providers in under 5 minutes
  • Fast, free and easy way to shop for insurance
  • Quickly find the perfect rate for you

Author Details

Ben Walker, CEPF, CFEI®

Ben Walker, CEPF, CFEI®, is credit cards specialist. For over a decade, he's leveraged credit card points and miles to travel the world. His expertise extends to other areas of personal finance — including loans, insurance, investing, and real estate — and you can find his insights on The Washington Post, Debt.com, Yahoo! Finance, and Fox Business.