Cheap Car Insurance for Low-Income Drivers

Car insurance is required by law in almost every state, but only three states — California, Hawaii and New Jersey — offer low-income car insurance for those struggling to afford coverage.

If you can’t get government assistance for your auto insurance, you will have to shop around and take other steps to keep your rates affordable.

How to get cheap car insurance with a low income

Since state government assistance is limited, your only option might be hunting for lower-priced car insurance policies and maybe choosing one with minimal coverage.

Note that each auto insurer uses a different formula to determine rates, so comparing quotes from multiple companies is important for finding the cheapest one.

How much car insurance do I need with a low income?

The good news is that if you have a low income, minimum-coverage car insurance may be all that you need.

The minimum amount of car insurance you need to drive legally varies by state:

• Almost every state requires liability to cover injuries and property damage you may cause to others in a car accident.
• Some states also require you to get uninsured motorist coverage and/or personal injury protection.

However, if you have a car loan, your lender will probably require you to get collision and comprehensive (comp) coverage as well. The two combine to cover your vehicle damage and theft.

States with government low-income car insurance

If you live in California, New Jersey or Hawaii, then you do have the chance to get government assistance via low-income car insurance. The details are different for each of the three states, however.

 Low-cost car auto insurance in California

California’s Low Cost Auto (CLCA) insurance program provides minimum-liability insurance to low-income drivers.

To qualify, you need

• A good driving record.
• A household income of less than 250% of the Federal Poverty level
• A car valued at $25,000 or less

Rates range from $232 a year to $932 a year.

 Low-income car insurance in New Jersey

Medicaid recipients in New Jersey can meet the state’s insurance requirements by obtaining a Special Automobile Insurance Policy (SAIP).

A SAIP only covers injuries you suffer in a car accident. If you qualify, it’s all you need to meet the state’s car insurance requirements.

A SAIP costs $365 a year and is available from almost any state-licensed car insurance company in New Jersey. You just need to provide documents that show you are enrolled in Medicaid to obtain or renew a SAIP policy.

 No-fault insurance for aid recipients in Hawaii

The Hawaii Joint Underwriting Plan (HJUP) offers free car no-fault car insurance to low-income drivers who qualify for certain public assistance programs.

You may qualify if you meet one of the following requirements:

• You receive public assistance through a program such as Temporary Assistance for Needy Families or the Aged, Blind or Disabled Program
• You receive supplemental security income through the Social Security Administration

If you qualify, you have to get a certificate of eligibility from the state’s Department of Human Services. Most state-licensed car insurance companies accept these certificates. The policies meet the state’s minimum no-fault car insurance requirement.

Cheapest car insurance companies for low-income drivers

Westfield and Erie offer the cheapest minimum-coverage car insurance nationwide, which is a good starting point for low-income drivers. That said, they might not be the cheapest for your particular state, so check below to make sure.

Westfield’s rates average $429 a year, or $36 a month. Erie’s rates average $505 a year, or $42 a month. However, both companies are only available in a limited number of states.

State Farm has the cheapest minimum coverage rates among widely available large companies. Its rates average $605 a year, or $50 a month.

Rates are for a 30-year-old male with a clean driving record and good credit. Your rates may vary.

What’s the cheapest car insurance company in my state?

The cheapest car insurance near you depends largely on the state where you live.

State Farm has the cheapest minimum-coverage car insurance rates in 18 states, and Geico is cheapest in eight. Farm Bureau affiliates offer the cheapest minimum-coverage car insurance in five states.

Rates are for a 30-year-old male with a clean driving record and good credit. Your rates may vary.

How much is auto insurance for low-income drivers?

The average cost of minimum-coverage car insurance is $777 a year, or $65 a month.

Insurance companies evaluate several factors to determine your rate, including your driving record, insurance history, age and ZIP code.

In most states, insurance companies also factor your credit into your insurance rate. However, insurance companies focus on the type of credit you use and your payment history, rather than your income.

How to get discount car insurance with a low income

In addition to shopping around for cheap car insurance, a low-income driver can save money by taking advantage of any discounts that may be available to you.

Best car insurance discounts for low-income drivers

• Bundling: Most car insurance companies offer discounts to customers who bundle car insurance with at least one other policy, such as home or renters insurance.
• Safe driving: Most large companies offer a discount for enrolling in their smartphone-based safe driver programs. If you avoid unsafe driving behaviors such as speeding and distracted driving, you may get subsequent discounts when you renew.
• Pay-per-mile insurance: If you don’t drive frequently, consider switching to pay-per-mile insurance, such as Allstate’s Milewise or Lemonade’s Metromile. With mileage-based insurance, your rate is based on the number of miles you drive, which means you’ll pay less if you drive less.

For each company you contact for a quote, ask about any additional discounts you may qualify to receive.