Cheapest Car Insurance For Low Income Drivers In 2022

Low income car insurance
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Although the cost of car insurance varies greatly by state, it is not cheap. Individuals with low incomes who cannot afford car insurance are more inclined to forego coverage completely, which might find them in serious difficulty.
Low-income people who can’t afford regular insurance have another option: join a low income car insurance program. Here we’ll see the cheapest car insurance companies for low-income drivers.

What is Low-Income Car Insurance?

Low-income car insurance is insurance that is only provided to low-income families. It enables people who cannot afford normal car insurance to obtain less priced coverage. The ultimate purpose of low-income car insurance is to reduce the number of uninsured motorists on the road.

State-level low-income car insurance is provided, however, it is not generally available. This form of insurance is available in only a few states. Each state has its own standards for low-income car insurance, and not everyone is eligible.

If you earn less than a specified amount of money and are registered in one or more government assistance programs, you are termed low-income. You must also have a valid driver’s license in your home state and a clean driving record. Many states also have minimum car value requirements.

Drivers should consider low-income car insurance as a last resort. You should only apply for low-income car insurance if you are unable to acquire affordable private insurance. Although low-income car insurance is less expensive, it does not provide as much coverage.

Who Should Get Low-income Car Insurance?

For those who cannot afford private coverage, low-income car insurance can be a lifeline. It is not, however, the best solution for everyone, and not everyone is eligible.

Low-income car insurance is designed for people who cannot afford any sort of private insurance, even with discounts.

However, low-income car insurance coverage is limited. It is not the same as insurance obtained from a private source. To keep costs low, most state-sponsored insurance schemes provide limited coverage. For example, California drivers enrolled in the CLCA program receive only liability and property damage coverage.

If you need coverage to avoid driving fully uninsured, low-income car insurance is an excellent alternative (which is illegal). It is not a suitable choice for anyone searching for complete coverage. Low-income car insurance frequently includes considerable gaps, which may result in out-of-pocket payments if you need to file a claim.

Car Insurance Companies with the Cheapest Rates for Low-Income Drivers by State

The cheapest car insurance policies for low-income drivers are those that just meet your state’s minimum liability coverage requirements. However, coverage needs vary by state, as do the cheapest companies on average.

We discovered that, with the exception of USAA, the lowest generally available minimum car insurance company in most states is GEICO, which was the cheapest option on average in 26 states. State Farm and Erie were also consistently the cheapest in seven and four states, respectively.

Military families who qualify for USAA should request a quote from the insurer. MoneyGeek discovered that if you can get a coverage, it is the lowest insurer overall and the cheapest in 38 states.

The quotes are for a 40-year-old driver with a bad credit score, but you can click on your state to see how rates vary based on family size and credit history.

Cheapest Car Insurance Companies For Low-Income Drivers By State (Excluding USAA)

StateCompanyAnnual Premium
AlaskaGEICO$696
AlabamaGEICO$704
ArkansasGEICO$706
ArizonaGEICO$768
CaliforniaProgressive$496

State minimum policies exclude comprehensive and collision insurance, which cover the costs of car damage. A full coverage policy is more expensive, but low-income drivers with valued vehicles may consider paying the extra cost to secure full coverage. Shopping around and comparing quotes is the simplest approach to save money on car insurance.

Cheapest Car Insurance Companies for Low-Income Drivers Nationally

Businessyield estimated national averages for firms for low-income drivers looking for the cheapest car insurance companies that are readily available. If you qualify, USAA is the lowest overall, with insurance that meet state minimums costing an average of $373 per year.

The runner-up is GEICO, which charges an average of $474 per year for minimal coverage insurance.

Low-income drivers can save money on their car insurance by shopping around. You can spend a larger portion of your income to other needs if you save hundreds of dollars every year on car insurance.

#1. USAA

If you are a member of the armed services, a veteran, or a family member of a service person, USAA is hard to beat. Policies that meet minimum state standards cost low-income drivers $373 per year on average, the lowest in the market, and customer service is excellent. USAA also offers personalized financial guidance. The main disadvantage is that non-military personnel are not eligible.

#2. GEICO

Even for drivers with bad credit, GEICO offers some of the lowest car insurance prices in practically every state. A minimal coverage policy costs low-income drivers an average of $474 per year, with the cheapest company available to all drivers. In addition to the already low rates, the organization offers a variety of discounts. You may acquire an online quote that explains everything the policy includes.

#3. State Farm Insurance

State Farm cost our sample low-income driver an average of $606 per year, making it one of the cheapest firms available, and it also offers numerous discounts. With over 19,000 agents nationwide, it’s simple to locate one near you.

State-Funded Automobile Insurance Programs

Government-sponsored programs in California, New Jersey, and Hawaii assist low-income drivers in affording insurance. If you live in one of these states, you should look into them.

#1. California’s Low-Cost Automobile Insurance Program (CLCA)

This program may be available to good drivers who earn less than 250% of the federal poverty line. It covers the chief driver of a vehicle as well as any eligible secondary drivers. To be eligible, you must:

  • own a valid California driver’s license
  • have an excellent driving record
  • Satisfy the income qualifying conditions
  • be at least 16 years old
  • Own a car worth less than $25,000

The coverage limitations are 10/20/3. It is less than the standard California liability limitations, but it is far superior to driving without insurance.

#2. The Special Automobile Insurance Policy of New Jersey (SAIP)

In New Jersey, a dollar-a-day program provides low-income drivers with medical care. To qualify, you must be registered in federal Medicaid with hospitalization. It provides up to $250,000 in emergency medical treatment following a car accident. It also includes a $10,000 death benefit if the accident kills someone. It does not cover you for doctor’s appointments beyond the initial treatment, nor does it give liability insurance.

#3. Aid to the Aged, Blind, and Disabled Program in Hawaii (AABD)

You may be able to purchase car insurance if you get financial support from the state’s Assistance to the Aged, Blind, and Disabled (AABD) program. To be eligible, you must meet one of the following criteria:

  • You must be 65 or older.
  • Blind by law
  • Total and permanent disability
  • Living with or caring for someone receiving AABD help
  • Have an income that is less than 34% of the current Federal Poverty Level
  • Auto insurance is free if you qualify.

What Kind of Car Insurance Do I Need If I Make a Low Income?

The bare minimum of liability insurance required by your state is the least expensive alternative. However, depending on your state, liability coverage may be fairly low. For example, most jurisdictions only pay bodily injury liability costs up to $50,000 per accident. If you want extra liability protection, MoneyGeek’s data shows that businesses often charge $100 to $200 more per year to extend your liability limits from state minimums to 50/100/100.

Adding collision and comprehensive insurance, often known as a full coverage policy, will cost more; businesses typically charge an additional $300 to $500 per year to add these coverages. This is only necessary if you have a loan or lease on the car, although many drivers should acquire it even if they aren’t compelled to.

Comprehensive and collision insurance will reimburse you for the worth of your car if it is damaged in any circumstance. We propose eliminating collision and comprehensive coverage when the premiums exceed 10% of the payout. For instance, if your insurance company rates your car at $5,000 and you have a $1,000 deductible, you’re paying for $4,000 in coverage. If your comprehensive and collision premiums exceed $400, or 10% of $4,000, you should think about eliminating the coverage.

Factors Influencing Your Car Insurance Rates

Your income has no bearing on your car insurance prices. However, car insurance companies take into account a variety of criteria that are related to income, such as where you live and your degree of education.

Your insurance prices will be affected by the sort of car you drive. High-performance, flashy sports cars cost more to insure because their drivers take more risks.

People with greater salaries may afford to pay for damages out of pocket, so they don’t have to make a claim for every accident, which results in reduced premiums: fewer claims = cheaper premiums.

Low-income drivers frequently have gaps or lapses in their insurance coverage, which can result in higher premiums. Insurance companies view persons with gaps in coverage as high-risk because they believe you were still driving even though you were without insurance at the time.

Other criteria considered by insurance providers include:

  • Vehicle
  • State and postal code
  • Age
  • Gender
  • Relationship status
  • Driving record
  • Previous insurance protection
  • History of claims
  • credit rating (except in California, Massachusetts and Hawaii)
  • Average distance traveled
  • Deductibles and coverage types

Does Your Credit Score Affect the Cost of Your Car Insurance?

Some insurance providers base their premiums on your credit score. Drivers with low credit are more prone to file claims, according to the logic. Some states, however, have ruled that this is discriminatory. Insurance companies cannot use your credit score as a determining factor if you live in California, Massachusetts, or Hawaii. If you live in another state, your credit score will have an impact on your insurance prices. If you have bad credit and need car insurance, you can still obtain it at a cheap insurance.

Credit scores are defined as follows in the table below:

  • Excellent credit: 769-794
  • Fair: 710-740
  • Poor: 524-577

According to Experian, the average credit score is 703.

Average Annual Credit Score Car Insurance Premiums

CompanyPoor CreditFair CreditGood Credit
USAA$1,460$936$883
GEICO$1,681$1,212$1,047
State Farm$2,527$1,482$1,235
Nationwide$1,781$1,518$1,341
Allstate$2,254$1,604$1,351
Progressive$2,475$1,792$1,381
Travelers$2,490$1,721$1,525
Farmers$3,281$1,776$1,578
MetLife$4,248$2,332$1,686

Ways for Low-Income Drivers to Save Money on Car Insurance

While you may need to do more research to obtain low-income car insurance, rest assured that reasonable coverage is available.

Here are the best ways for low-income families and individuals to obtain affordable car insurance.

  • Look around. This has been noted before, but it needs repeating. Insurance providers’ rates might vary substantially. Shopping around for car insurance may feel like a full-time job at first, but in the long run, it might save you the equivalent of a year’s income. To save time, use free online quotation comparison sites.
  • Complete payment. When possible, pay for your annual car insurance in one lump sum. This can save you up to 15% on your auto insurance each year.
  • Look for bargains. To of the discounts accessible to low-income drivers—and all drivers in general—have already been discussed. Look for auto insurance providers that provide the biggest discounts, and you might save up to 30% on your annual premium.
  • Improve Your Driving Record. Good, responsible drivers pay less for car insurance. It’s as simple as that. Tickets and citations can add hundreds, if not thousands, of dollars to your rates each year.
  • Improve Your Credit Score. Except for Hawaii, Massachusetts, and California, all states consider your credit score. Raising your credit score might save you a lot of money on insurance. Make a budget and begin paying down your bills.
Read Also: WHAT CREDIT SCORE IS NEEDED TO BUY A CAR: Credit Score You Will Need to Buy a Car in 2022
  • Rethink Your car. Although performance and luxury automobiles appear good, they are more expensive to maintain and repair (and hence more expensive to insure), and performance vehicles are involved in more accidents.
  • Determine Your Level of Protection. To drive legally in most states, you must have at least the bare minimum of coverage. However, if you can afford to increase your liability insurance to the next level, it is worthwhile. However, if the BlueBook worth of your car is merely a few thousand dollars, you probably don’t need complete coverage. Another way to save money is to forego rental car insurance and roadside assistance.
  • Go with Usage-Based. Although not all states offer usage-based insurance coverage, some do, and if you’re a cautious, conscientious driver, this feature could be beneficial.

Low Income Car Insurance FAQs

Which type of car insurance is best?

A comprehensive car insurance policy is always recommended because it protects not just someone else’s car, as Third-Party car insurance does, but also your own car and any injuries to the owner-driver.

What factors affect auto insurance rates?

Your car, driving habits, demographic characteristics, and the coverages, limitations, and deductibles you select are all elements that may influence your auto insurance prices. These considerations may include your age, anti-theft systems in your car, and your driving record.

What are some ways you can save money on the cost of your car insurance?

  • Look around for car insurance.
  • Before you buy a car, compare insurance costs.
  • Increase your insurance deductible.
  • Reduce the optional insurance coverage on your older car.
  • Combine your insurance policies and/or continue with the same provider.
  • Keep a clean credit history.
  • Benefit from low-mileage discounts.
  • Inquire about group insurance.

References

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