Car insurance is legally needed for the majority of drivers, but not everyone can afford it. The average annual cost of car insurance in the United States is $488 for required minimum coverage, according to ReliableInsurance June 2024 pricing research.
While options for low-income drivers are limited, a few states provide government-sponsored car insurance programs to help keep people from driving uninsured. These low-income car insurance schemes often provide limited coverage at significantly lower prices.
Low-income car insurance programs by state
California
California’s Low-Cost Auto Insurance program allows residents to purchase the minimum liability insurance needed to drive legally. You may also add:
- Uninsured motorist bodily injury coverage covers for medical expenses if you are involved in an accident with an at-fault driver who does not have insurance.
- Medical payments coverage pays medical claims for you and your passengers, regardless of who is at fault in an accident.
The program’s insurance will not cover damage to your own vehicle, which is covered under collision coverage in conventional policies.
Cost: $232 to $932 per year, on average, depending on where you live and your driving history.
Eligibility requirements: You must be at least 16 years old, have a valid California driver’s license, and possess a car valued $25,000 or less. You must also meet specific income standards, which vary based on the number of persons in your family. The following are the maximum income restrictions for one to four-person households:
- One person: $37,650 per year.
- Two people: $51,100 per year.
- Three people: $78,000 per year.
- Four people: $91,450 per year.
How To Get Coverage: To apply, begin by completing an eligibility questionnaire.
Hawaii
The Hawaii Department of Human Services offers free car insurance to those citizens who receive financial assistance through the agency’s programs.
Cost: Free if you qualify.
Eligibility requirements: You must own a vehicle and hold a valid Hawaii driver’s license. You must also receive Supplemental Security Income or assistance from one of the programs listed below.
- Temporary assistance for needy families.
- General assistance.
- Aid for the Aged, Blind, and Disabled.
How to obtain coverage: Contact one of the state’s processing facilities.
New Jersey
New Jersey’s Special Automobile Insurance Policy covers emergency injury care after a car accident, as well as serious brain and spinal cord damage up to $250,000. It also offers a $10,000 death payout for car accident victims. It does not provide liability insurance for damage caused to other people’s vehicles or pay to restore your own.
Cost: $360 per year for the policy if you pay upfront, or $365 if you’d rather pay in two installments.
Eligibility requirements: You must be enrolled in federal Medicaid with hospitalization coverage. You must also possess a valid New Jersey driver’s license and registration.
How to receive coverage: Look for a SAIP provider or contact 1-800-652-2471.
Other ways to find cheap car insurance
What if you are ineligible for your state’s car insurance program or it does not exist? Here are some other ways to lower your premium.
Shop around. Every insurance company calculates its premiums differently. Before choosing a policy, we recommend collecting rates from at least three different insurance companies. Shop once a year to ensure you are still getting the best deal.
Increase your deductible. A car insurance deductible is the portion of a claim that you are responsible for paying. Assume you hit a deer, incurring $1,000 in damage to your vehicle. If your comprehensive deductible is $250, your insurance company will pay $750.
Raising your deductible reduces your car insurance rate, but it is dangerous. If you can’t afford a large deductible, choose a lower one.
Inquire about discounts. Most carriers provide discounts for things like driving safely, installing anti-theft devices in your vehicle, and bundling auto and house insurance plans. Check with your agent to see if you’re receiving all of the discounts for which you qualify.
Eliminate unnecessary coverage. If your car isn’t worth much, it usually doesn’t require comprehensive or collision coverage. These coverage kinds only pay for the total worth of your car, minus the deductible. Dropping them can save you hundreds of dollars each year.
