Low-Income Car Insurance: 2023 Guide

Progressive and National General are two of the cheapest car insurance companies for low-income drivers.
Written by R.E. Fulton
Edited by Kathleen Flear
Low-income drivers in California, Hawaii, and New Jersey can access cheap
car insurance
policies through government programs—but drivers in every state can save on car insurance by building credit, picking the best coverage level, and qualifying for discounts.
  • California, Hawaii, and New Jersey offer government-sponsored affordable auto insurance programs for low-income drivers.
  • Drivers in other states can find reduced insurance rates by qualifying for discounts, adjusting coverage, or enrolling in a usage-based insurance program that rewards safe driving habits with savings.
  • Progressive and National General offer some of the lowest rates for low-income drivers. 
  • Lapses in insurance coverage can result in severe financial penalties, serious risks in the event of an accident, and insurance increases when you get coverage again—so avoid them at all costs. 

State-sponsored low-income car insurance programs for families and individuals

There are only three states where the government offers state-sponsored auto insurance at affordable rates to low-income families: 
  • California
    : California’s Low-Cost Auto Insurance (CLCA) program provides partial coverage of auto insurance premiums for California drivers who meet a certain low-income threshold, effectively lowering the cost of car insurance. To qualify, applicants must have a household income below 250% of the federal poverty level and own a car valued at less than $25,000. 
  • Hawaii
    : In Hawaii, only low-income
    seniors
    and applicants with disabilities are eligible for discounted car insurance coverage through its Assistance to the Aged, Blind, and Disabled (AABD) services. Those who qualify get free auto insurance through the government. 
  • New Jersey
    : New Jersey has a
    “dollar-a-day”
    low-cost auto insurance program called the Special Automobile Insurance Policy (SAIP). Residents enrolled in federal Medicaid are eligible for the program, but it covers only emergency medical costs—a dangerously low level of coverage. 

Other low-income car insurance programs

A few other states have non-governmental programs and companies that offer discounted insurance rates to low-income individuals and families. 
CURE (Citizens United Reciprocal Exchange)
Michigan
, New Jersey, and
Pennsylvania
  • Low-income car insurance company 
  • Mainly looks at driving history, rather than factors like credit scores
  • Independent studies show that many drivers can still get cheaper rates from companies like
    GEICO
    and
    Progressive
    , so compare quotes before purchasing a CURE policy
Maryland Automobile Insurance Fund
  • Covers the cost of liability coverage for
    Maryland
    residents who can’t afford it
  • If you’ve been denied coverage in Maryland, you may be able to get affordable coverage through this program

The best car insurance companies for low-income drivers

If you don’t live in a state with government-sponsored car insurance for low-income drivers—or if you don’t meet the eligibility requirements for these programs—you’ll need to purchase a regular auto insurance policy from an insurance company. 
But not every company will give you the same rate. Your age,
driving record
, type of car, and whether you stick with minimum coverage can all affect your auto insurance rates, but every insurer calculates those rates a little differently. 
Sometimes finding affordable car insurance is as simple as
comparing car insurance quotes
until you find the insurance provider with the best rate for you! The table below compares some of the best small car insurance companies for low-income drivers:
Insurance companyAverage monthly premiumAverage annual premium
Progressive$162$1,940
National General$167$2,006
Nationwide$168$2,018
Mapfre$169$2,034
Clearcover
$172$2,060
Travelers$172$2,061
State Auto$175$2,099
Safeco$176$2,116
Kemper$181$2,173
Plymouth Rock$181$2,174

How your income could affect your car insurance rates

Having a low income can increase the amount you need to pay for car insurance. 
While insurance companies don’t actually take income level into account when setting car insurance premiums, they do consider the following factors:
  • Homeownership status
  • Education
  • Age
  • Gender
  • ZIP code
  • Violations
  • Accident history
  • Previous lapses in coverage
A low credit score, a high-crime ZIP code, or a year or two between insurance policies could all cause your rates to go up. 
MORE: The best car insurance for bad credit drivers

How to lower car insurance costs

If you can’t afford your car insurance premiums, there are ways to lower your costs without sacrificing coverage (and setting yourself up for higher rates in the future). 

Look for discounts

The #1 way to save on car insurance is to compare multiple quotes. The next best way? Ask your insurance company about discounts. 
Most insurance companies offer
a range of discounts
, but they don’t advertise them all. 
You might hear a lot about discounts for
bundling home and auto insurance
—but you can also cut your costs by making electronic payments, getting good grades, or installing an anti-theft device in your vehicle.
The table below shows some of the most common car insurance discounts and how much they could help you save. 
Discount
Description
Average savings
Most insurers allow policyholders to bundle multiple insurance products (e.g. home and auto, renters and auto) for a discounted rate on each. 
5% – 25%  
Drivers with a
clean driving record
often qualify for discounts, and many companies offer telematics programs that track safe driving habits in real time. 
10% – 40% 
Anti-theft discounts
Installing anti-theft devices or etching your VIN on often-stolen components could earn you a discounted rate on comprehensive coverage. 
5% – 25% (comprehensive coverage only) 
If you insure more than one car with the same company, you’ll often get a discounted rate on each. 
8% – 25%
Good student discounts
Drivers under 25 years old with a GPA of 3.0 or above (i.e. a B average) often qualify for discounted premiums. 
8% – 25%
By simply paying your premium as a single annual lump sum, you could reduce the amount you need to pay. 
6% – 14% 
Most companies offer discounted rates to customers who make electronic payments rather than writing checks. 
3% – 6%
Buying a policy before your current one expires could actually earn you a discount, especially if you purchase over a week before your renewal date.
2% – 15%
Some insurance companies allow drivers to lower their rates by taking an approved defensive driving course, but options vary by state and provider. 
5% – 10%
Keep in mind that many insurance companies allow policyholders to stack discounts—meaning that your savings could add up quickly! 

Choose a higher full-coverage deductible

If your insurance policy includes
collision coverage
and
comprehensive insurance
, you can lower costs quickly by
raising your deductible
Your deductible is the amount you agree to pay out of pocket on a collision or comprehensive claim before your coverage kicks in. The higher it is, the less you’ll pay to maintain your coverage. 
Just be careful: Don’t pick a deductible that’s higher than what you could realistically afford to pay out of pocket in the event of an accident. 

Raise your credit score

This one’s easier said than done, but it could have an outsized effect on your rates. Poor credit can raise your insurance rates by 72% compared to good credit.
Here are a few ways to improve your score:
  • Paying bills on time
  • Keeping your credit utilization low
  • Keeping unused cards open 
  • Get your free credit report annually and check for any discrepancies
MORE: How to build your credit score without applying for a credit card 

Enroll in telematics

Insurance companies give the best rates to drivers with good driving records. You can lower your rates in real-time if your insurance company has a telematics program. 
Through a telematics device, your provider can track your driving habits and lower your rate based on how well and how often you drive. If you know you’re a safe driver and want your rate to reflect it, ask your insurance agent about telematics. 

Don’t let your auto insurance lapse

If you’re overwhelmed by the cost of car insurance, you might be tempted to let your coverage lapse and drive without any insurance—especially if you’re confident in your driving skills. 
Don’t do that. While you might free up space in your budget in the long term, you can’t control the possible consequences of driving uninsured:
  • Financial penalties: All it takes is a few miles over the speed limit or a burn-out taillight, and you could face fines up to $5,000, suspension of your driver’s license, and even jail time for driving without insurance.
  • Uninsured accidents: If you accidentally cause an accident without
    liability insurance
    , you’ll be on the hook for the other driver’s costs—and the average cost of hospitalization following a car accident is $60,000. 
  • Higher insurance rates: Insurance companies see
    an insurance lapse
    as a major red flag and will charge you higher rates when you need to activate a policy again. If you’re not driving at all, it’s better to purchase a
    non-owner car insurance policy
    , which is typically much cheaper than regular car insurance.  
Keep in mind: Many states have automatic reporting directly from your insurance company to the DMV, so the DMV will be notified of your insurance lapse in real time.
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The lowest level of car insurance is state minimum coverage, which typically includes bodily injury and property damage liability insurance. In some states, minimum coverage also includes uninsured motorist coverage and/or personal injury protection (PIP).
Up to two. The California Low-Cost Automobile (CLCA) insurance program allows individuals to insure up to two vehicles on a CLCA policy, provided they are registered to the policyholder. In fact, all vehicles registered to you must be covered by a CLCA policy. 
No. Car insurance rates aren’t negotiable, so you can’t get a lower premium just by calling up your insurance company. However, adjusting your coverage, adding safety features to your vehicle, or enrolling in a usage-based insurance program could all help you lower your rates.
The best way to find the cheapest car insurance is to compare quotes from multiple providers. The
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