Hollay Ghadery Last Updated On: June 27, 2023

All About Low Income Car Insurance

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 low income car insurance for individuals and families. Keep reading!

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Table of Contents

Low Income Auto Insurance: Who Should Get It?

A low-income car 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 to avoid the weighty and expensive legal implications of driving a vehicle that’s totally uninsured, 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 car insurance can leave you struggling to pay out-of-pocket for expenses not covered.

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Which States Offer Low Income Car Insurance Programs?

Not all states offer low-income car insurance programs. In fact, only three states currently offer government-sponsored low income auto insurance: California, New Jersey, and Hawaii.

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.

What Discounts Are Available to Low Income Drivers?

Now we’re going to talk about the second option of low-income car insurance for individuals and families: 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:
  • Multi-Vehicle Discount: If you have more than one vehicle insured on a single policy, you may be eligible for a discount.
  • Anti-Theft Feature Discount: If your car has theft prevention devices like an alarm or a passive disabling system, your insurance may provide a discount on your rate.
  • Safety Features Discount: Features like daytime running lights, anti-lock brakes, and airbags could get you a reduced rate on your car insurance.
  • Good Driver Discount: Your past driving history matters. Drivers who have not had any traffic violations or accidents in the last three to five years (depending on the insurance provider) will often get a good driving discount.
  • Defensive Driving Discount: Many insurance providers will offer a discount if you complete a licensed defensive driving course. In some cases, you may be required to retake the course every year or so to maintain your discount, but it could be worth your while for the money you save in the long run.
  • Reduced Mileage Discount: For people who drive their car less than 10,000 miles per year, a reduced mileage discount may be available. Just bear in mind you may need to install a mileage tracker to prove your vehicle usage.

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The Cost of Car Insurance for Drivers with Low Income

The cost of auto insurance for low income drivers 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.

What Factors Could Impact Your Car Insurance Rates?

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:

  • Coverage type and deductibles
  • Average mileage
  • Previous insurance coverage
  • Marital status
  • Driving history
  • Gender
  • Age
  • State
  • Zip code
  • Vehicle type

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Reduce Your Car Insurance Premium: Tips for Low-Income Drivers

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 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.

  1. Shop Around. We’ve mentioned this before, but it bears repeating. Rates between insurance companies can vary dramatically. Shopping around for car insurance may feel like a full-time job at first, but it could save you the equivalent of a year’s wages in the long run. Be sure to use free online quote comparing sites to save time.
  2. Pay in Full. When possible, pay for your annual car insurance all at once. This can save you up to 15% per year on your auto insurance.
  3. Seek Out Discounts. We’ve already touched on all the discounts available to low-income drivers—and all drivers in general. Look for auto insurance companies that offer the best discounts and you could save up to 30% a year.
  4. Clean-Up Your Driving Record. Good, responsible drivers don’t pay as much for car insurance. It’s that simple. Tickets and citations can add hundreds of dollars to your premiums every year—if not more.
  5. Better Your Credit Score. With the exception of Hawaii, Massachusetts, and California, all states look at your credit score. Raising your score can save you a lot on insurance. Make a budget and start paying down debts.
  6. Reconsider Your Car. Performance and luxury cars may look nice, but they are more expensive to maintain and repair (therefore costing more to insure) and performance vehicles are involved in more accidents.
  7. Ascertain Your Coverage Level. To drive legally in most states, you require at least the basic amount of coverage. However, if you can afford to bump up your insurance to the next level of liability, it’s worth it. This said, if the BlueBook value of your car is only a couple thousand dollars, you likely don’t need full coverage. Another cost-saving tip: drop rental car insurance and roadside assistance.
  8. Go Usage-Based. Not all states have usage-based insurance coverage options, but some do, and if you’re a cautious, responsible driver, this feature could pay off.

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.


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