Low-Income Earner? Take A Look At Our Ultimate Guide To Low-Income Car Insurance In The U.S.
Unless you live in an area where public transportation is easily accessible and efficient, the chances are that you will need a car.
Owning a vehicle comes with many expenses, one of which is car insurance.
Although 13% of drivers in the U.S. don’t have car insurance, in most states car insurance is required by law.
To be able to register your car and drive it, you will need minimum liability insurance.
For low-income individuals, buying even the most basic, minimum liability car insurance can sometimes be difficult to manage financially.
Fortunately, there are ways in which you can get low-income auto insurance.
With a little bit of know-how and by approaching the right car insurance companies, you can save a lot of money on your car insurance.
In this article, we outline how to find low-income car insurance that suits your budget and needs, as well as provide some insight into how much it costs.
What Is a Low-Income Earner?
The classification of a low-income earner varies by state.
As a rule, an individual is considered a low-income earner if their monthly household income is less than double that of the Federal Poverty Level (FPL).
FPL guidelines are released every year. These guidelines are intended to help agencies decide who may be eligible for government programs.
The FPL measures family income, meaning that they evaluate how much income a household is able to earn every year.
The following table includes some of the FPL figures for 2022. Here you will be able to see whether you qualify as a low-income earner.
As a low-income earner, you will be eligible for various benefits, including low-income car insurance.
Family size | 2022 Income Per Year |
For individuals | $13,590 |
For a family of 2 | $18,310 |
For a family of 3 | $23,030 |
For a family of 4 | $27,750 |
What Is Low-Income Car Insurance?
Low-income car insurance is designed to help low-income individuals who generally cannot afford private car insurance to get an affordable car insurance policy.
It’s important to know that low-income car insurance coverage is usually quite limited.
Low-cost insurance can be obtained in two ways—either through a government-sponsored low-income car insurance program (also known as public auto insurance), or by taking some simple steps to reduce private car insurance costs.
How Can Low-Income Drivers Get Help from the Government to Pay for Car Insurance?
Household income is not typically used to determine car insurance rates and the average car insurance company will not have a special program in place to assist low-income families.
However, there are some state-operated car insurance programs that low-income individuals can look into.
These are designed specifically to help low-income vehicle owners find affordable car insurance.
Government car insurance is unfortunately not available in all 50 states. Currently, only California, Hawaii, and New Jersey offer it.
Maryland also offers a low-income insurance program, but it’s not funded by the state.
Hawaii
- Be blind.
- Have suffered from a physical or mental disability for at least 12 months which has caused you to be unable to work.
- Live with and take care of someone who receives AABD benefits.
- Have a terminal condition that prevents you from working.
New Jersey
The Special Automobile Insurance Policy (SAIP) is a state-run program with more limited benefits compared to the other states mentioned in this article.
This plan provides only the medical coverage portion of your auto insurance.
To be eligible for this low-income auto insurance, you will need to already have qualified for Federal Medicaid with Hospitalization.
SAIP costs $365 per annum and is dependent on the annual renewal of your Medicaid benefits.
This special automobile insurance policy will pay for emergency medical treatment straight after an accident, including the treatment of brain and spinal injuries up to $250,000.
In the event of death, a $10,000 benefit will be paid out.
California
- 1 person = $30,150.
- 2 people = $40,600.
- 3 people = $51,050.
- 4 people = $60,500.
- Maintain a good driving record.
- Have had no at-fault accidents in the past three years.
- Be at least 16 years old.
- Have a valid driver’s license.
- Own a vehicle that is valued at less than $25,000.
- Be a resident of California.
- $15,000 bodily injury or death per person.
- $30,000 bodily injury or death per accident.
- $5,000 property damage per accident.
- $10,000 bodily injury or death per person.
- $20,000 bodily injury or death per accident.
- $3,000 property damage per accident.
Maryland
Formerly known as the Maryland Automobile Insurance Fund (MAIF), Maryland Auto Insurance (MAI) was founded in 1973.
It was created for people who could not get the legally required auto insurance coverage that they needed from the private insurance sector.
Essentially, MAI is like private insurance for low-income families and anyone who has been turned down by two other insurance companies.
You also need to have a valid driver’s license and must reside in Maryland. The insurance coverage options that you can get are the same as in the private insurance sector.
According to Maryland law, you will need the following minimum liability insurance coverages:
- Bodily injury: $30,000 per person / $60,000 per accident.
- Property damage: $15,000 per accident.
- Personal injury protection (PIP): $2,500.
While you can also add the following additional coverages to your insurance policy, there’s a good chance that they will increase your premium:
- Uninsured / underinsured motorists bodily injury: $30,000 per person / $60,000 per accident.
- Uninsured / underinsured motorists property damage: $15,000 per accident.
The MAI offers various payment options which can be of great help when you are working on a tight budget. These are the three ways that you can pay:
- Pay in full: When you settle the full annual premium up front, you will also get a further discount.
- Interest-free installment plan: You can settle your premiums over an agreed period without interest.
- Extended payment plan: This will be similar to a loan, where you sign an agreement with a third-party finance company and pay back the installments of the loan over a few months.
What Are Some Cost-Saving Alternatives to Government Auto Insurance?
There are various ways that you can make sure you are getting the cheapest auto insurance rates possible.
Keep a good credit score
Maintaining any accounts and managing any debt that you have is very important.
Depending on the state you are in, your credit score will impact how much you pay in car insurance cover.
The only states that may not use your credit score as a factor in deciding your car insurance premiums are California, Massachusetts, and Hawaii.
Companies like Experian allow you to get a free credit score report. The credit score you receive will fall into three main categories.
- Good: 769-794.
- Fair: 710-740.
- Poor: 524-577.
The average credit score is 703, according to Experian.
Consider usage-based coverage
If you are a safe driver and don’t travel very far every month, then usage-based insurance may be a good option for you.
Your insurance company will plug a telematics device into your vehicle, or attach one to your vehicle. This is a device that allows them to track your driving.
A telematics device tracks information such as:
- How hard your brake.
- How fast you accelerate.
- Rapid changes in speed.
- How fast you drive.
- Your average distance per trip.
- Your average speed per trip.
Maintain a safe driver record
Car insurance companies will consider you a safe driver if you have been incident free for three or more years.
This means that you must not have filed any insurance claims, or received any tickets for traffic violations.
Evaluate the coverage that you need
You will need to have minimum liability coverage in place in order to drive your car, but these requirements are very low.
If you are able to afford it, try to get additional liability coverage, such as comprehensive and collision coverage.
This will ensure that after an accident you have enough funds to pay for any repairs to your car.
However, if your car isn’t worth more than a few thousand dollars, this insurance may not be worth the money. In this case, you can save on insurance costs.
If you have roadside assistance and rental car insurance, you can also cancel these to save even more money.
Be sure to go through each and every detail of your plan with your insurance company to make sure you have exactly the cover you need.
Choose a car that is cheaper to insure
Some cars are less expensive to insure than others. It all comes down to how much the car will cost to repair or replace in the event of an accident or theft.
For example, a car with advanced safety equipment like parking assistance can increase repair costs. When it comes to security, some cars are popular targets for theft.
If you keep a car that is not expensive to repair or replace, and is not statistically popular with thieves, you may be able to drastically lower your car insurance premiums.
According to Forbes Advisor, the cheapest car to insure is the Subaru Outback.
Take a look at their list of the cheapest and most expensive cars to insure and see if you can spot your car on it.
Insurance companies are also willing to assist, so you can call them to check whether your car is considered expensive to insure, and ask them which car they would recommend for cheap auto insurance rates.
Take advantage of common insurance discounts
Not all insurance companies will disclose where you can reduce your car insurance premiums, so it’s important to know what insurance discounts you can ask for when speaking to your insurance company.
Here are some of the most common car insurance discounts that you can ask for:
Multi-vehicle discount
If you have two cars in the family and have them both insured with the same company, you will be eligible for a discount.
Anti-theft feature discount
If you have an alarm, an immobilizer, or a passive disabling system installed on your car, you may be able to save money on your car insurance premiums.
Safety features discount
Although advanced safety features will increase your insurance premiums, common safety features in newer model cars will earn you a premium discount.
These include airbags, anti-lock brakes, and daytime running lights.
Good driver discount
As we’ve mentioned earlier, your driving history can make a big difference to your insurance premiums.
If you have not had any traffic violations or insurance claims over the past three years, you will be eligible for a discount.
Defensive driving discount
If you are able to complete a defensive driving course, it is likely that you will receive a discount on your insurance premiums.
In some cases, you may need to take the course every year, but the cost of the course versus the savings to your premiums may be well worth it.
Reduced mileage discount
If you drive your car less than 10,000 miles per year, you may be able to get reduced car insurance quotes.
You will need to invest in an electronic mileage tracker, or keep a logbook to record the distances that you drive each day and month to track your mileage.
Job-related discounts
If you work as a teacher, physician, or police officer, you could qualify for a cheaper car insurance policy.
Statistically, these professions are less likely to file insurance claims.
First responders, members of the armed forces, engineers, and government employees also qualify for discounts.
Raise your deductible
A deductible is the amount you pay out-of-pocket before your insurance company will pay out any expenses.
You can reduce your car insurance premium by raising the deductible, being the amount of money that you’ll need to pay if you file a claim.
Cover small claims yourself
A single accident can raise your car insurance premiums substantially, so if you have the money available to do so, try to cover small claims yourself.
For example, if you are involved in a small car accident that only damages your car slightly, try to cover the cost of the repairs yourself.
Shop around for cheap car insurance
If you are looking for low-income car insurance, you may need to compare quotes from various insurance companies.
The easiest way to do this is by using our free quote generator. This will give you a great head start.
Once you have found an insurance quote that suits your needs and pocket, you can give the insurance company a call and complete the insurance process.
Can Your Income Affect Your Car Insurance Rates?
Your income is not a factor when insurance companies are deciding on your car insurance rates.
But car insurance companies will look at some of the factors below to set your insurance premium:
- Vehicle.
- State and ZIP code.
- Age.
- Gender.
- Marital status.
- Driving history.
- Previous insurance coverage.
- Claims history.
- Credit score (except in California, Massachusetts, and Hawaii).
- Average mileage.
- Coverage type and deductibles.
Key Point: Low-Income Drivers Can Be Seen as High-Risk Drivers
Low-income drivers sometimes have gaps or lapses in their car insurance cover, which will lead to higher car insurance rates.
If you have had a lapse in your insurance cover, you will be seen as high risk because insurance companies will think that you were driving without insurance during the lapse.
Low-Income Auto Insurance for Seniors
The cost of car insurance usually increases for senior citizens. If you are a mature driver, you may be wondering what your low-income insurance options are in your state.
Apart from the government-sponsored programs that we have already mentioned, there are unfortunately no official offers for senior citizens who are low-income drivers.
The best approach is to not only look through the recommended ways of saving money that we have already pointed out, but also shop around for a special automobile insurance policy.
Some insurance providers will offer low-income senior citizens discounted rates as they get older. This is often done in association with AARP.
How Much Does Car Insurance Cost for Low-Income Drivers?
We’ve analyzed some of the cheapest car insurance companies in the U.S. to understand which of them could offer the most affordable auto insurance to low-income drivers.
The table below includes the cheapest rates for low-income car insurance on a national scale.
The cheapest car insurance companies for low-income drivers include Mile Auto at just $60 per month, followed by Aspire General, SafeAuto, and Certainly which all offer low-income auto insurance for under $100.
The General was the most expensive provider with a monthly auto insurance premium of $376.
Auto Insurance Provider | Average Insurance Premium Per Month |
Mile Auto | $60.29 |
Aspire General | $70.00 |
SafeAuto | $90.00 |
Certainly | $98.00 |
Commonwealth Casualty | $102.00 |
Hugo | $105.00 |
Dairyland | $125.43 |
AssuranceAmerica | $127.00 |
Elephant | $134.33 |
Freedom National | $142.00 |
GAINSCO | $171.29 |
Bristol West | $216.09 |
Direct Auto | $245.80 |
USA Underwriters | $255.00 |
Liberty Mutual | $290.50 |
Hugo | $336.00 |
The General | $376.60 |
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