Car insurance is very important regardless of your income level. But if your budget is already stretched to the max due to low-income, finding affordable car insurance can be an intimidating (but doable) challenge.
Minimum auto insurance requirements vary by state, but nearly every state requires some level of insurance coverage. Regardless of income, unless you live in an area with accessible public transportation chances are you will need a vehicle. That means you will also need affordable car insurance.
There is nothing pleasant about having to choose between paying your car insurance or feeding your family. But that is a reality for many people in the United States today. If you have been in that situation, you are definitely not alone.
Here, we’ll cover everything you need to know about finding affordable auto insurance on a low-income.
- Residents of California, New Jersey and Hawaii have access to state-sponsored low-income car insurance programs.
- Pennsylvania, New Jersey, and Maryland also have non-profit or not-for-profit insurers that can help low-income residents.
- The best options for those living in other states are low-cost insurers and discounts.
What is low-income car insurance?
Low-income car insurance is exactly what it sounds like, low-cost insurance for low-income individuals or families.
Low-cost insurance can be achieved in two ways, through government-sponsored low-income car insurance programs or by implementing simple strategies to help reduce your car insurance costs.
Whether your state offers low-income auto insurance programs or you need to lower your insurance cost on a standard auto insurance policy, we’ve got you covered.
States that offer low-income car insurance
Currently, three states in the U.S. offer government car insurance for low-income residents. California, Hawaii, and New Jersey have implemented these programs for low-income individuals and families to make car insurance a more affordable necessity.
How do low-income auto insurance programs work?
Government-sponsored low-income car insurance programs vary by state in terms of eligibility requirements and what coverage they provide.
California low-income car insurance
California’s Low Cost Auto Insurance Program (CLCA) is a government-sponsored program created in 1999 to offer affordable liability-only protection to low-income drivers who meet certain eligibility requirements. Their goal is to make the state’s minimum liability requirements affordable for everyone, and therefore, reduce the number of uninsured drivers on California roads.
Hawaii low-income car insurance
Though part of Hawaii’s Assistance to the Aged, Blind and Disabled (AABD) program is intended to help provide low-income car insurance, it is specifically targeted to income-eligible individuals who are 65 or older and who meet the Social Security Administration’s definition of disabled or blind. State-mandated liability insurance may be provided for individuals who meet these requirements at no cost.
New Jersey low-income car insurance
New Jersey offers the Special Automobile Insurance Policy (SAIP) to drivers on Medicaid. This special program only covers emergency medical treatments for qualified injured drivers. It provides no liability coverage and does not meet the state’s minimum auto insurance requirements.
Cheapest minimum coverage car insurance by state
Most states do not have state-sponsored low-income car insurance programs. And yet, there are low-income people throughout the country. If you are one of those people, Progressive and Geico are the best insurance providers to consider.
Both insurers regularly advertise their low rates, and the data supports those claims. Our expert analysis finds that state minimums for Progressive and Geico are $315 and $318, respectively.
Remember that these policies only cover the bare minimum, including bodily injury and property damage liability. Your car won’t be covered with these policies, but this low income auto insurance will be meet the legal requirements.
- State Minimum: Lowest Liability Limits
- USAA is among the top 10 cheapest companies with a rate of $358 but is only available to military members, veterans and their immediate family.
Cheapest full coverage car insurance companies
If the bare minimum is just too risky or if you’re required full coverage by your lender, here are the cheapest options:
- Full Coverage: 100/300/100 with Comprehensive and Collision, $500 deductible
- USAA is among the top 10 cheapest companies with a rate of $1,111 but is only available to military members, veterans and their immediate family.
Citizens United Reciprocal Exchange
The Citizens United Reciprocal Exchange (CURE) is available to residents of Pennsylvania and New Jersey. It is a not-for-profit organization established in the 1980s.
This program provides insurance to those who may struggle to find affordable car insurance for low-income individuals. Specifically, factors such as education, occupation, and homeownership that would normally increase your rates won’t affect them under this program. Instead, rates are based on driving history.
Maryland Automobile Insurance Fund
Are you a resident of Maryland and struggling to find auto insurance for low income? If so, this program may be able to help.
Maryland Auto is a non-profit for those who have been denied coverage or had their coverage canceled due to considerations like low or no credit, serious accidents, or speeding tickets. If you are a low-income resident of Maryland and have struggled to maintain coverage, this program is worth a look.
Why do some states offer low-income auto insurance and others don’t?
You may be wondering why only three states in the U.S. offer low-income auto insurance programs when people all over the U.S. are facing financial hardship due to low income.
If so, you are not alone.
As insurance companies determine your auto insurance rates, one factor they do not include is income. This means that if all other factors (like age, driving history, and coverage levels) are equal, a person making $30,000 per year will pay the same for their car insurance policy as someone making $200,000.
Organizations like the National Association of Insurance Commissioners (NAIC) and the Consumer Federation of America (CFA) keep a close eye on factors, like income, that impact insurance affordability. Research indicates that access to a car, and therefore, car insurance is crucial in gaining and maintaining employment. Employment, and therefore, access to it, is the lifeblood for personal financial health and state economic health. Car insurance affordability affects everyone.
In 2017, the NAIC published the Study of Affordability of Personal Automobile Insurance conducted by the U.S. Federal Insurance Office. This study uses an Affordability Index to assess the affordability of personal auto insurance within each zip code of each state.
The results were staggering. In over 9% of all zip codes in the U.S., the cost of auto insurance exceeded the Affordability Index, affecting more than 18.6 million residents.
Don’t lose hope. As organizations and consumer advocacy groups continue this type of research and illustrate the correlation between affordable insurance and employability, there may be hope that additional states in the U.S. will begin to offer government-sponsored low-income auto insurance programs.
Low-income auto insurance for seniors
If you are a senior citizen on Medicaid, you may wonder, “does Medicaid cover car insurance?” The quick answer is no. Though it may assist with medical costs related to an accident, Medicaid does not pay for auto insurance.
However, if you are on Medicaid, some states offer special programs or opt-out option for personal injury protection.
These options are state-specific. Research your state to determine if you qualify for any Medicaid-related low-income car insurance benefits.
Even if you are not on Medicaid, special discounts for seniors, like a senior citizen driver discount upon completion of an approved defensive driving course, may be available.
Broad form insurance
Currently, 11 states in the US offer what is called broad form insurance: Colorado, Delaware, Idaho, Iowa, Maryland, Mississippi, Nebraska, Nevada, Ohio, Tennessee and Washington.
Broad-form insurance is a minimal liability-only coverage for one named driver. This coverage is usually the least expensive option but often does not meet state minimum requirements. Please ensure you will meet your state’s minimum auto insurance requirements before considering broad form insurance.
Low-income car insurance: Is affordable auto insurance even possible?
It is possible.
Don’t be discouraged if you are on a constrained budget and are struggling to pay your auto insurance. There are many ways to ease that burden and reduce your auto insurance rates, whether you live in a state that offers low-income car insurance or not.
Remember, in times of financial strain, some insurance is better than no insurance. However, reducing coverage to minimums should be a last resort only after you have attempted all other methods of reducing your car insurance costs.