May 28, 2024

How To Get Cheap Insurance For Low-income Drivers – Forbes Advisor


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Car insurance is required in most states but it can be challenging to find affordable coverage if you’re on a tight budget. There are ways to find car insurance for low-income drivers that won’t break the bank, though. 

For example, buying only the state-minimum auto insurance is one way low-income drivers can get cheap coverage. The average cost for state-minimum insurance ($467 annually) is 78% cheaper than a full coverage policy ($2,150 annually) that includes comprehensive and collision coverage. Other ways to find low-income income car insurance are by comparison shopping or by living in a state that has a state-sponsored auto insurance program.

State-Sponsored Insurance Options for Low-Income Drivers

If you cause an accident and you’re uninsured, you’ll be on the hook for paying for other people’s damages and injuries—which could result in a worse financial predicament. With that in mind, a few states have car insurance programs for low-income drivers to help them get coverage. The details of state-sponsored programs vary by state.

California Low-Cost Automobile Insurance Program (CLCA)

California’s low-cost auto insurance program was established in 1999 as a way for low-income individuals to obtain affordable California auto insurance, regardless of immigration status. To qualify you need to:

  • Be at least age 16.
  • Have a valid California driver’s license (an AB 60 license is acceptable) or pending reinstatement.
  • Have a California address where you reside and park your car.
  • Have a good driving record.
  • Meet income eligibility requirements (household annual income doesn’t exceed 250% of the federal poverty level).
  • Own a vehicle valued at $25,000 or less and have no more than two vehicles registered in your name. (Having a car you don’t own that’s registered in your name may be allowed in certain situations.)

Car insurance prices under this program vary by county but cost an average of $268 a year for liability-only coverage. 

You can add uninsured motorist coverage for about $30 a year more. This coverage pays for injuries to you and your passengers if you’re in an accident caused by an uninsured driver.

You can also buy medical payments coverage for about $20 a year. This type of insurance pays for your and your passengers’ medical bills and other types of expenses, regardless of who caused the accident. 

Notably, the CLCA program’s liability limits are lower than the usual state minimum amount to help reduce the cost. 

California car owners with a standard policy must have minimum liability car insurance limits of 15/30/5: 

  • $15,000 per person and $30,000 per accident of bodily injury liability.
  • $5,000 of property damage liability. 

But a CLCA policy has liability coverage of only 10/20/3. Those limits are low and if you cause an accident it would be easy to exceed these limits. Still, the CLCA program is better than driving uninsured. 

Check out the rate calculator at the state’s official CLCA website at and also compare car insurance quotes for a regular policy outside of the CLCA to see which best fits your needs.

New Jersey Special Automobile Insurance Policy (SAIP)

Unlike other state low-income car insurance programs, New Jersey’s special automobile insurance policy provides only medical coverage. 

New Jersey’s SAIP is for drivers who are enrolled in Medicaid with hospitalization coverage. SAIP gives you medical coverage of $250,000 for emergency treatment after an auto accident (and a death benefit of $10,000). New Jersey SAIP coverage costs $365 per year and is also known as “dollar-a-day insurance.” 

New Jersey low-income drivers who aren’t eligible for SAIP can look to save money by buying a Basic Policy (instead of a more robust standard policy). A Basic Policy provides limited benefits but counts as meeting minimum car insurance requirements in New Jersey. The Basic Policy is available to all New Jersey drivers. A New Jersey Basic Policy includes only: 

  • $5,000 per accident for property damage liability.
  • $15,000 per accident for personal injury protection.
  • You can add on $10,000 bodily injury liability for all persons per accident and collision and comprehensive coverage are available with some insurers as optional coverage.

Hawaii’s Program For Low-Income Drivers

Hawaii has a state program that lets certain Department of Human Services (DHS) recipients obtain Hawaiian no-fault car insurance at no cost. The policy is sold through the Hawaii Joint Underwriting Plan. To be eligible, the car owner must be receiving financial assistance from one of the following sources:

  • Temporary Assistance to Needy Families 
  • Temporary Assistance to Other Needy Families 
  • Aid to the Aged, Blind, or Disabled 
  • General Assistance programs 
  • Supplemental Security Income from the Social Security Administration 

The vehicle being insured must be owned by the person receiving the assistance and the person must have a valid Hawaii driver’s license unless permanently disabled and unable to operate their vehicle. If there are multiple registered car owners, all of them must receive a form of assistance from the list above to qualify for free Hawaii car insurance.

Find out more information by calling the public assistance information line at (855) 645-1643 or contacting DHS.

Maryland Auto Insurance Program

Maryland’s car insurance program for low-income drivers is not state-subsidized but it does help Maryland drivers who have been unable to find coverage through standard car insurance companies get a policy.

Maryland Auto Insurance (formerly known as The Maryland Auto Insurance Fund) doesn’t consider your credit or education or if you’ve had a lapse in coverage, which may help low-income drivers who have either of those issues. To use the Maryland Auto Insurance program, you must:

  • Be a resident of Maryland.
  • Own a vehicle registered in Maryland or have a valid Maryland driver’s license.
  • Have been canceled or not renewed by a standard insurer for a reason other than nonpayment or have been refused insurance by two standard car insurance companies.
  • Not owe Maryland Auto any money—you must be current on  your payments.

If you’ve had trouble finding Maryland car insurance due to having poor or no credit, lapses in car insurance or being an inexperienced driver, Maryland Auto may be a good choice. You’re guaranteed to get car insurance as long as you meet the eligibility requirements.

Cheapest Car Insurance for Low-Income Drivers by State

A state-minimum car insurance policy is the cheapest type of auto policy for low-income drivers. Minimum coverage requirements vary by state, but liability insurance—which pays for damages and injuries to others if you’re at fault in an auto accident—is the foundation of any policy.

Your state’s requirements may mandate that you buy other types of car insurance coverage beyond liability insurance, such as uninsured motorist, personal injury protection or medical payments coverage. 

We analyzed the average cost of the minimum car insurance required in each state. Geico is the cheapest company in over 25 states (excluding USAA, which is only available to military members, veterans and their families). USAA is an excellent choice if you need low-income car insurance and have a military connection. Other drivers may want to check rates from Geico or another company offering the cheapest price. 

Cheapest Companies for Minimum Auto Insurance Coverage

A state-minimum auto policy doesn’t include collision and comprehensive insurance, which compensates  you if your vehicle is stolen or damaged in an accident or non-crash situations, such as fire or hail damage. If you have a lease or loan and your lender requires you to have these coverages, shop around for the cheapest full coverage car insurance.

Cheapest Car Insurance for Low-Income Drivers Nationally

From a nationwide perspective, Progressive has the cheapest auto insurance for low-income drivers at $299 per year, on average. That’s a 49% savings compared to Allstate’s rate of $589 per year, highlighting why you should make sure to shop around when low cost is your primary goal.

How Much Does Regular Car Insurance Cost for Low-income Drivers?

The average cost is $39 per month for a standard car insurance policy that includes only state-required coverage, based on Forbes Advisor’s analysis. 

Income is not among the factors that affect car insurance rates, but poor credit will often influence what you pay for coverage. Insurance companies in most states can consider your credit-based auto insurance score when setting rates, and sometimes that score has a significant weight in the rate calculation. Insurers also take these following into account:

  • Age and driving experience
  • Driving record
  • Location
  • Make and model of your vehicle
  • Types of coverages chosen
  • Your auto insurance claims history

How Low-Income Drivers Can Save Money on Insurance

Like all drivers, low-income drivers can save on car insurance by considering these money-saving methods.

Ask About Car Insurance Discounts

Insurers offer car insurance discounts for many reasons, so check with your insurance company to make sure you’re getting all the ones you’re eligible to receive. For example, you may get a small discount by going paperless or you may snag a big discount by bundling your home or renters insurance with your auto insurance.

Consider Pay-Per-Mile Insurance

A pay-per-mile auto insurance policy may be suitable for you and reduce costs if you don’t drive a lot. If you’re retired, work from home or generally don’t drive much, paying a base rate plus a per-mile rate could yield savings.

Increase Your Deductible

A car insurance deductible is the amount the insurance company subtracts from your comprehensive and collision claims checks following a claim. Increasing your car insurance deductible amount typically saves money because the higher your deductible, the less the insurance company pays out for a claim. 

A Forbes Advisor analysis of car insurance deductibles and rates found that drivers who increase their deductibles can save between 7% to 28% a year on average.

Maintain a Good Driving Record

Low-income drivers with a good driving record—one free of accidents and traffic violations—will see cheaper car insurance rates. Good drivers pose less risk to insurers, so they receive lower rates. 

If you had a traffic ticket that recently dropped off your driving record, take the time to shop around for cheaper car insurance. The insurer giving you reasonable rates with a ticket on your record may not be the most affordable now when you have a clean driving record.

Own a Car That’s Cheaper to Insure

Some cars cost more than others to insure for a variety of reasons, such as the car has a higher value, a history of expensive claims or is more likely to be stolen. For instance, you’ll pay higher rates if your car insurance company has a history of paying high liability claims due to the severity of accidents for your specific car model.

To reduce your car insurance costs, you can evaluate if you should change your car to one that insurers find to be less of a risk and thus will cost less to insure. Checking out which cars are the most and least expensive for car insurance before buying one is a way to make sure you purchase a car that is cheaper to insure. 

Reduce Your Coverage

Consider reducing your coverage to lower your costs if you have a car insurance policy with extra coverage on it you don’t need. One example is dropping collision and comprehensive coverage if you own an older car with a low value. Another option is cutting extras like rental reimbursement or roadside assistance, especially if you have roadside assistance from your car company or an organization like American Automobile Association. 

Shop Around

The top tip for saving money is to comparison shop with multiple car insurance companies. Compare car insurance quotes from multiple auto insurers because they weigh rating factors and calculate costs differently, meaning their rates can vary widely. It’s possible to save hundreds of dollars a year by finding the insurer that rates best for your specific situation

Other Options for Low-Income Drivers

If you still require assistance after seeking state or federal help, here are some other options to consider.

Cure Auto Insurance

If you live in Michigan, New Jersey or Pennsylvania, you can look into the Citizens United Reciprocal Exchange, better known as Cure Auto Insurance. It’s a not-for-profit car insurance company that focuses on your driving behaviors when determining rates.

Cure doesn’t look at factors such as credit score, education or occupation when determining rates, so you may find its rates are cheaper than other options. Compare Cure with other car insurance companies to see which one gives you the best price.

Insurer of Last Resort

If finding auto insurance is a problem because you have a bad driving record, a lapse in coverage or other issues, you can look to your state’s assigned risk pool to get an auto policy. 

The traditional way to get car insurance is to go through the voluntary market, meaning you shop around and pick your own insurer. But auto insurance companies may turn you down if you’re considered high risk. When this happens, you can go to an insurer of last resort, another term for a state’s assigned risk pool.

States require insurers to be part of the assigned risk pool for auto insurance and insurer must accept drivers assigned to them. The downside is that the prices are quite high. Finding insurance on your own in the voluntary market is generally much cheaper, so try that route first.


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