Car insurance can seem like something you don’t need—until you really need it. There’s no question that car insurance is an expense, but an equal truth is that it doesn’t have to be a major expense. It’s not only possible but easy to find low income car insurance for individuals and families.
Despite the fact that 13% of drivers in the US do not have car insurance, in most states, car insurance is a requirement by law in order to register your vehicle and drive it. So, if you live in a place where you don’t have access to public transportation to take you where you need to go, chances are, you need a car and car insurance.
For low income individuals or families, finding affordable car insurance comes down to adopting one of two strategies: applying for low income car insurance programs or by reducing your car insurance cost by using a few simple tactics.
We’ll discuss both options now, telling you everything you need to know about how to get car insurance for low income families and individuals. Keep reading!
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A low-income auto insurance program facilitates this essential service for people who otherwise may not have been able to afford private car insurance, even after applicable discounts.
This said this low-cost option isn’t the best choice for everyone. Yes, it’s extremely affordable, but this affordability is achieved by cutting coverage. You may only get basic coverage like property damage and liability with low-income auto insurance. This sort of coverage is fine if all you want to do is avoid the weighty and expensive legal implications of driving an uninsured vehicle, but it is not a good choice if you’re looking for more robust coverage.
Should you ever need to file a claim, low-income auto insurance can leave you struggling to pay out-of-pocket for expenses not covered.
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Not all states are offering car insurance for low-income programs. Only three states currently offer government car insurance for low-income:
While the qualifications for these programs vary depending on the state in which you live, all of these programs aim to make auto insurance more affordable for low-income individuals and families.
California:
California’s Low-Cost Auto Insurance Program (CLCA) offers low-cost insurance rates for eligible drivers.
CLCA eligibility requirements:
CLCA will allow you to reduce your insurance limits for bodily injury liability and property damage liability if you meet the above qualifications. Since participants in this program are exempt from state requirements, your limits would be $10,000 per person for bodily injury or death, $20,000 total for bodily injury or death, and $3,000 for property damage. Depending on your insurance history and county, your premiums vary.
Hawaii:
Aid to Aged, Blind, and Disabled (AABD) provides additional coverage for some Hawaii residents.
Eligibility for Hawaii’s AABD program:
To receive benefits under Hawaii’s AABD program, you must contact the Hawaiian Department of Human Services.
New Jersey:
Special Automobile Insurance Policy (SAIP) in New Jersey only covers your medical expenses after a car accident.
Costs and requirements of SAIP:
The SAIP covers emergency medical treatment immediately following an accident, as well as serious brain and spinal injuries up to $250,000. It also pays a $10,000 death benefit in the event of a fatal accident.
SAIP only covers medical expenses, so comprehensive and collision coverage aren’t included.
Now we’re going to talk about the second option of car insurance for low-income drivers: finding strategic discounts to help make car insurance less costly.
Regardless of your income level, many insurance companies incentivize keeping your business with them by rewarding loyalty and good driving.
Here are some of the most common and money-saving car insurance discounts:
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The cost of car insurance for low income people varies, largely depending on where you live. The reason for this is car insurance companies believe that people who live in particular zip codes tend to file more claims. So, if you live in one of these areas, you may pay more.
However, if you live in a low claim ratio zip code, you’ll pay less.
Also keep in mind that the less you make, the more of your income will go toward paying your insurance. Let’s look at an example: The Federal Poverty line is $12,760 per year. If you had a car insurance policy with a top 3 insurance company in the U.S., your car insurance would be 9.7% ($1237.72) of your yearly income. This is obviously a potentially debilitating amount of money to spend at this income level. However, it’s important not to cancel your insurance thinking you can reinstate it later: you’ll be faced with higher premiums.
The good news is that insurance companies vary in regards to how they categorize different zip codes, so shop around for the best low income auto insurance quotes. One company may have significantly lower rates than another.
When you’re looking for the best car insurance for low income individuals and families, you should be aware of the factors that could impact your car insurance rates.
Let’s first point out that being low income doesn’t make your rates higher. As mentioned earlier, the rates may take a more sizable chunk out of your annual income, but the rates are not based on your income.
However, people with higher incomes may get better rates because when accidents happen, they are typically better able to pay for damages out-of-pocket, so fewer claims are filed. The fewer claims you make, the lower your premiums.
While an insurance company will not consider your income, specifically, it will consider many factors that are likely related to your income, such as your education level and where you live.
Your vehicle is also a consideration. People with high-performance cars and flashy vehicles are more likely to get into accidents because they are typically more risk-inclined. Therefore, these types of cars are more expensive to insure.
Another factor that may increase the rate of insurance for low income individuals is lapses in insurance coverage. Insurance companies interpret these gaps as proof (or strong probability) that you were driving without insurance, which makes you, in their eyes, less responsible.
To recap and expand, here are factors insurance companies consider:
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Your credit score is also a consideration in all states except Hawaii, Massachusetts, and California.
8 Ways Low-Income Drivers Can Lower Their Car Insurance
While you may have to do more homework to get low-income family car insurance, rest assured, it is possible to get affordable coverage.
Here are the best ways to get affordable car insurance for low-income families and individuals.
Here’s how Usage-based insurance works: your auto insurance company uses a plug-in, app, or telematics device to monitor how you drive. Changes in speed, lane changes, and braking are all recorded. If you drive well, you’re rewarded with lower rates. If you don’t, however, your premiums could increase.
Also, consider low-mileage plans if you don’t drive often. These policies only have you pay for every mile you drive.
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Yes, low-income households and individuals can get discounts on their auto insurance policies. Discounts like reduced mileage discounts, good driver discounts, and safety feature discounts can lower premiums by 30% per year.
If you live in New Jersey, Hawaii, or California, you can apply for public auto insurance provided by your state government. Drivers in these states and all other states in the US can also buy their insurance online. Be sure to compare quotes.
Absolutely. Any driver of any income level is well-advised to take some time to compare car insurance quotes online. In just a few minutes, you can see and secure quotes from car insurance companies that have plans to suit your budget and desired level of coverage.
Hollay Ghadery Hollay Ghadery is a writer and editor who is passionate about financial literacy as a means to personal fulfillment. Hollay has over 18 years of experience creating content about a range of topics related to personal finance, including insurance, investing, banking, and credit cards. When Hollay isn't writing, she's spending time with her four children, two dogs, and three goats.
