How to Get Cheaper Car Insurance With a Low Income

Car insurance can be expensive, especially for low-income households, but you have several ways to make your premiums more manageable.

The good news is that insurance companies don’t use your income level as a factor to determine car insurance rates. And if you’re a low-income driver, you may qualify for your state’s government assistance program to get cheaper car insurance.

Cheapest car insurance companies for low-income drivers

COUNTRY Financial, NJM, and Auto-Owners offer some of the most affordable liability insurance coverage nationwide. Pay-per-mile companies, like Hugo and Mile Auto, can also help lower your cost of car insurance if you’re an infrequent driver.

Take a look at the table below for the companies with the cheapest average liability-only rates.

You can lower your car insurance costs by using one or more of the following strategies.

1. Take advantage of state-sponsored programs

California, Hawaii, Maryland, and New Jersey offer low-income car insurance programs to eligible drivers. These programs provide cheap or free car insurance, allowing low-income families to drive legally.

• 

  California

  California’s Low Cost Auto (CLCA) Insurance Program helps low-income people meet the state’s liability insurance requirement at lower rates. Additional coverage options, such as uninsured bodily injury and medical payments coverage, are also available at an extra cost.

  You and any secondary drivers must meet the following requirements to qualify for California’s car insurance assistance program:^[2]

  • Have a valid California license

  • Be 16 or older (applicants younger than 18 must be legally emancipated)

  • Own a vehicle valued at $25,000 or less

  • Have a clean driving record or be a new driver

  • Earn less than the annual household income limit

  When you’re ready to apply or if you have further questions, call the customer support line at 1 (866) 602-8861 or find an insurance agent near you.

• 

  Hawaii

  The Hawaii Department of Human Services (DHS) offers free no-fault insurance to drivers who receive financial assistance. To qualify, low-income residents must show proof of payment from the following programs:

  • Temporary Assistance to Needy Families with Dependent Children

  • General Assistance Program

  • Aid to the Aged, Blind, or Disabled

  • Supplemental Security Income under the Social Security Administration

  Additionally, each policyholder must own the insured vehicle and have a valid Hawaii driver’s license (unless permanently disabled or unable to operate their own vehicle).^[3]

  Contact the public assistance information line at 1 (855) 643-1643 for more information, or reach out to one of the DHS processing centers.

• 

  Maryland

  The Maryland Auto Insurance program caters to high-risk drivers whose policies have been turned down or canceled by other car insurance companies. While established by the state of Maryland, the organization is independently funded through premium payments and its investment portfolio.

  Maryland Auto Insurance provides state-mandated coverages, which include liability insurance, uninsured motorist, and personal injury protection (PIP) coverage. You can also upgrade your policy with collision, comprehensive, rental car reimbursement, and towing coverage.

  Drivers must fulfill the following requirements to be eligible for this program:^[4]

  • Be a Maryland resident

  • Own an automobile registered in Maryland or have a valid Maryland driver’s license

  • Had their policy canceled or denied by two or more insurers

  • Not owe Maryland any unpaid premium

  When you’re ready to apply, obtain a quote on the company’s website, call 1 (808) 492-7120, or fill out the online form. If you prefer to work with an insurance agent, use the agent locator tool to find an agent near you.

• 

  New Jersey

  New Jersey’s Special Automobile Insurance Policy (SAIP) medical-only car coverage helps low-income drivers meet state insurance requirements. This policy covers your medical expenses, such as emergency treatments and treatments for severe brain and spinal cord injuries. It also provides a death benefit.

  To qualify for coverage, applicants must satisfy the following criteria:^[5]

  • Be enrolled in federal Medicaid with a hospitalization benefit

  • Own a valid driver’s license or registration in New Jersey

  New Jersey’s “dollar-per-day” insurance costs $360 per year if paid in full or $365 if paid in two installments. To obtain coverage, find a Personal Automobile Insurance Plan (PAIP) producer in your area or call 1 (800) 652-2471.

2. Compare car insurance quotes

Insurance companies weigh various factors and calculate costs differently, so your premiums will vary by insurer. By shopping around, you can save upwards of 30% on your policy. You can use an online quote-comparison tool to find the best price for your situation.

Follow these steps to get a quote:

1. Provide personal information. Answer a series of questions about yourself, your vehicle, and your driving history.

2. Compare real-time quotes. Compare cost, coverages, and company reputation to find the best option for car insurance.

3. Purchase a policy. Finalize your insurance policy online or by speaking to an agent.

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3. Ask for common car insurance discounts

Insurance companies offer discounts to reward safe driving and promote loyalty. If you’re looking to save money on your policy, check your insurer’s website or ask your agent for any deals you may qualify for.

Below are a few common discounts to ask about:

• Good driver discount: Save up to 22% if you’re a driver who hasn’t been involved in an at-fault accident or received a ticket during a set period of time.

• Telematics program discount: Participating in your company’s usage-based insurance program can result in a discount of up to 30% on your policy.

• Multi-policy discount: Bundle multiple insurance products, like auto and home insurance, to save up to 25% on car insurance.

• Good student discount: Students who earn good grades can get up to 15% off their insurance policy.

• Military discount: Active-duty military members and veterans can qualify for up to 25% off their insurance policy with a military discount.

4. Consider pay-per-mile car insurance

With pay-per-mile insurance, your monthly premiums are tied to your mileage. You’ll pay a base rate plus a per-mile rate. For example, on its website, Mile Auto includes a monthly rate with a potential base rate of $48 and a per-mile rate of 8 cents. So, if you drove 300 miles, you’d pay a $72 premium for that month.

Pay-per-mile insurance is cheapest for people who don’t drive much, such as retirees or people who work from home. If you commute frequently, other insurers might be a more affordable option for you.

5. Reduce your coverage amount

A liability insurance policy is generally the least expensive option. If you’re on a tight budget, consider downgrading to your state’s minimum auto insurance requirements — but be aware of the risks.

A liability-only policy provides bare-minimum coverage and covers only the other parties’ expenses and injuries in an accident you cause. It doesn’t protect you or your vehicle, so you’d be financially responsible for your own expenses and vehicle repairs if you’re at fault in an accident. Depending on the severity of the incident and your car’s value, this could be costly.

One caveat: If you finance or lease your vehicle, your lender will probably require you to maintain a full-coverage policy. In that case, consider other strategies to lower your premiums.

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6. Buy a car that’s cheaper to insure

If you find yourself in the market to buy a car, compare features before buying to determine how those features will affect your premiums. Older, lower-value vehicles with equipped safety features are generally cheaper to insure. Meanwhile, newer or luxury cars require more coverage, so they’re costlier to insure.

The table below shows the cheapest vehicle makes and models to insure, according to Insurify data.

Low-income car insurance FAQs