Auto insurance is intended to protect you financially when something happens to your vehicle. So when paying for coverage starts to put stress on your bank account, what options do you have for low-income car insurance?
This article will look at the states where low-income car insurance is available and show you the average price of coverage and ways to lower your annual premium. Our team of experts has reviewed the best auto insurance companies, and we’ll also give our take on providers that may suit your budget well.
In this article:
- What Is Low-Income Car Insurance?
- States That Offer Low-Income Car Insurance
- How Else Can I Get Low-Income Car Insurance?
- What’s The Average Cost Of Insurance?
- Our Recommendations For Car Insurance
- FAQ: Low-Income Car Insurance
What Is Low-Income Car Insurance?
Depending on where you live, low-income car insurance can have different definitions. In most instances, it means having affordable car insurance that focuses on reducing costs and is better suited to your finances.
Some states offer low-cost car insurance programs, which typically have eligibility requirements for coverage. These policies are usually reserved for people who earn less than a certain amount of money, are in government assistance programs, or have specific reasons for not being able to secure minimum coverage from other providers.
States That Offer Low-Income Car Insurance
California, Hawaii, and New Jersey offer low-income auto insurance through a government-run alternative to traditional car insurance companies. In addition, Maryland has a longstanding public insurance provider with a board of trustees appointed by the governor. Here’s a closer look at these low-cost programs:
California Low-Income Car Insurance
Established by the state legislature in 1999, California’s Low-Cost Auto Insurance Program (CLCA) is a way for people on strict incomes to purchase liability auto insurance. Eligibility is based on having a good driving record, being under a certain income threshold, carrying a California driver’s license, and owning a vehicle valued at less than $25,000.
A basic liability policy from the CLCA includes:
- $10,000 bodily injury coverage per person
- $20,000 bodily injury coverage per accident
- $3,000 property damage liability
Annual car insurance rates from the CLCA vary across the state but range from $244 to $966. Motorists who have maintained licenses for at least three years without violations may be eligible for a good driver discount.
Hawaii Low-Income Car Insurance
Hawaii’s Assistance to the Aged, Blind, and Disabled (AABD) program includes low-income car insurance for qualifying individuals. To receive assistance from the AABD, you must first apply for Supplemental Security Income and be 65 years or older, legally blind, or permanently disabled. There’s also a requirement that your income be at least 34 percent below the federal poverty level.
The Hawaii Joint Underwriting Plan (HJUP), an option for drivers who have been turned down by other insurance companies due to previous accidents or convictions, is one way for high-risk drivers to secure insurance. It works as a risk-pooling arrangement that all Hawaii auto insurance providers must participate in.
The Hawaii Department of Commerce and Consumer Affairs mentions that though HJUP coverage meets state requirements, it may be more expensive than the industry standard.
Consumers can apply through any licensed auto insurance agent in Hawaii, who will then contact one of the following authorized providers: First Insurance Company of Hawaii, Island Insurance, or State Farm.
New Jersey Low-Income Car Insurance
For $365 per year, New Jersey residents eligible for federal Medicaid with hospitalization benefits can apply for the Special Automobile Insurance Policy (SAIP). Instead of covering damages to vehicles or property, this coverage focuses on emergency medical payments if you’re involved in a wreck.
The policy covers emergency treatment immediately after an accident and care for serious brain or spinal cord injuries up to $250,000, according to the New Jersey Department of Banking and Insurance.
Because the plan is extremely limited, motorists in need of low-income car insurance still need to buy bodily injury liability coverage to ensure that there are no surprise costs if they cause a collision.
Maryland Low-Income Car Insurance
Maryland is an interesting case for low-income car insurance. In 1972, the state government founded the Maryland Auto Insurance Fund as a public insurance option. The group doesn’t receive state funding but caters to Maryland residents who’ve been rejected by two or more insurance companies.
Now called Maryland Auto Insurance, the group brokers policies through over 1,400 insurance agents. Customers can buy the minimum required insurance, which in Maryland consists of liability coverage and uninsured motorist coverage. Maryland Auto Insurance also provides personal injury protection, along with collision coverage and comprehensive coverage.
How Else Can I Get Low-Income Car Insurance?
If your state doesn’t offer one of the low-income car insurance policies above, you can find savings via other avenues. Reassessing your current coverage and talking with an agent about auto insurance quotes might keep some money in your pocket.
Remember that insurance is meant to cover expenses that policyholders wouldn’t typically be able to afford. When asked in 2018 about an unexpected $400 expense, only 61 percent of Americans said they could cover it, according to the Federal Reserve. With auto insurance, you’ll need to weigh peace of mind with how much coverage you can afford.
Take A Lower Coverage Level
Start by considering how much car insurance you actually need.
If you drive an older vehicle worth less than $4,000, you can probably get a lower rate by reducing coverage. One rule of thumb is that you should drop full coverage if your annual cost of insurance is more than 10 percent of the payout you’d receive in a total loss claim.
Only carrying liability insurance is another way to save money if you own a car outright and need low-income car insurance. Dropping collision and comprehensive insurance comes with a risk, though, since you won’t be reimbursed if your car gets damaged.
Look For Extra Discounts
Insurance providers offer plenty of ways to save on coverage with car insurance discounts. Companies like USAA have good student discounts, reward customers for taking defensive driving courses, and reduce rates for bundling an auto policy with homeowners insurance.
If you’re a family looking for cheap auto insurance, some providers have discounts for insuring everyone using the same company.
Don’t Let Coverage Lapse
Even if you can’t afford auto insurance, completely dropping coverage can have serious consequences. If an insurer sees a lapse in coverage, your car insurance costs could go up. Driving without insurance is illegal in almost every state, and being cited for not carrying insurance could get you labeled as a high-risk driver.
What’s The Average Cost Of Insurance?
Because each state has different minimum requirements for liability coverage, your average cost will vary based on where you live. While insurance companies don’t look at personal income when deciding your average rates, the following factors are usually considered:
- The make, model, and mileage of your vehicle
- Your age
- Where you live
- Your credit score
- Your driving record
- Previous car insurance claims
The National Association of Insurance Commissioners (NAIC) looks at average car insurance premiums across the United States. Here’s how coverage costs compare across the nation:
|State||Liability Average Premium||Collision Average Premium||Comprehensive Average Premium||Combined Average Premium|
|District of Columbia||$809.41||$535.96||$228.71||$1,574.09|
If you feel like your insurance rates have increased over the past few years, you’re probably right. The NAIC tracks changes in the average price of insurance premiums year over year. Between 2014 and 2018, average annual rates rose by over 20 percent with the exception of comprehensive coverage. Here’s a look at the NAIC’s findings:
|Insurance Premium||Cumulative Change from 2014 to 2018|
|Annual liability premium||+21.12%|
|Average collision premium||+22.53%|
|Average comprehensive premium||+17.13%|
|Combined average premium||+20.98%|
Our Recommendations For Car Insurance
If you’re seeking low-income car insurance, researching companies can save you money in the long run. After reviewing every major U.S. auto policy provider, we found Geico and Progressive to be great options with relatively affordable prices.
Geico: Best Overall
Geico has built a reputation off of affordable auto insurance rates and its memorable slogan. In our Geico auto insurance review, we gave the company 4.5 out of 5.0 stars and named it the country’s Best Overall choice. Drivers seem to agree, considering that Geico has become the second-largest car insurance company in the United States.
One of Geico’s best highlights is its relatively cheap car insurance premiums. There are plenty of discounts to be found as well, from savings for safe drivers to affiliation-based offers for military members and federal employees. Be sure to check out the full discount list before signing up with Geico, as it could lead to significant savings.
Progressive: Best For High-Risk Drivers
If you've had a previous violation, claim, or period without insurance, you may want to check out Progressive. Low-income drivers may want to use Progressive’s Name Your Price® tool, and the company’s A+ rating from the BBB shows that it takes customer service seriously.
Discounts available to customers include a continuous insurance discount, lower rates for setting up automatic payments, and savings for bundling home and auto insurance policies. Check out our Progressive car insurance review to see what coverage works for you.
In an effort to provide accurate and unbiased information to consumers, our expert review team collects data from dozens of auto insurance providers to formulate rankings of the best insurers. Companies receive a score in each of the following categories, as well as an overall weighted score out of 5.0 stars.
- Industry Standing: Insurers with strong financial ratings and customer-first business practices receive the highest scores in this category.
- Availability: We consider availability by state as well as exclusions for specific groups of drivers.
- Coverage: This rating is based on types of insurance available, maximum coverage limits, and add-on policies.
- Cost and Discounts: Our research team reviews auto insurance rate estimates generated by Quadrant Information Services for a variety of drivers in every state. Companies with lower prices and many car insurance discount opportunities receive the best scores.
- Customer Service: We comb through customer reviews and consumer feedback studies from experts like J.D. Power.
- Technology: Auto insurers with mobile apps, advanced online services and telematics are more likely to meet consumer needs.