Car insurance is mandatory in all but a handful of states. However, not everyone can afford the $1,674 annual cost of full coverage car insurance.
Your income has no bearing on your insurance premiums; insurers do not offer discounts for low-income policyholders. Insurance industry tactics that discriminate against those with lower incomes may result in higher premiums for you.
The usage of zip codes and job status in insurance underwriting results in higher premiums for consumers with lower incomes. It can be difficult to receive the necessary coverage if you don’t make enough money to pay for car insurance (or any at all). Depending on where you reside, you may be able to find low-cost car insurance, but there is currently no nationwide program.
State-Sponsored Insurance Options for Low-Income Families
To help drivers who cannot pay standard car insurance, some jurisdictions have created alternative insurance programs and financial aid. The criteria for participation in state-funded programs varies from California and Hawaii to New Jersey.
California’s Low-Cost Auto Insurance
You must be at least 16 years old, have an annual household income of no more than $32,200, and have a vehicle with a value of $25,000 or less to qualify. For a couple living together, the $43,550 threshold is increased. A valid driver’s license is also required for each driver. The program covers for minimum required liability coverage but not for additional types of auto insurance like comprehensive or collision.
Hawaii: The Assistance to the Aged, Blind and Disabled (AABD) program
Residents of Hawaii who are 65 or older, handicapped, or blind and whose household income is 34% or less of the federal poverty line in 2006 are eligible for this program. Those who participate in the program receive financial assistance that can be used to pay for more manageable car insurance premiums.
New Jersey’s Special Automobile Insurance Policy
People eligible for federal Medicaid with hospitalization can purchase this policy for $365 per year. However, not all states or Medicaid programs are covered under this policy. The policy only covers up to $250,000 for immediate medical care following an accident. There is a death benefit included in the plan of $10,000.
No coverage is provided in the event of an accident, either liability, comprehensive, or collision. There is a limit of one car per policy, and if your license or registration has been revoked or suspended, you will not be eligible for policy.
How Low-Income Drivers Can Save on Car Insurance
California, Hawaii, and New Jersey offer low-income drivers coverage. They’re not as useful as standard car insurance. Insureds with no other options use it. Hawaii’s program isn’t car insurance-specific, and California and New Jersey have strict requirements. If you look, you can save on car insurance. Request prices and rates online using free resources.
Choose a few quotes and visit each company’s website to examine policy and coverage details, business ratings, consumer complaints, and customer service ratings. This will help you choose the finest quality-to-price company.
Raising your deductible reduces monthly premiums. Before insurance pays, you pay your deductible. Ask about discounts and eligibility. For five-year accident-free drivers, GEICO offers up to 22% savings.
Several insurers offer programs that lower costs if you let them track your driving. Allstate Drivewise and State Farm Drive Safe & Save are examples. However, apps and devices that track your driving may boost your insurance prices if you speed or drive quickly, which may create privacy concerns.
Premiums can be lowered further with usage-based programs like Allstate’s Milewise, a pay-as-you-go service. Milewise calculates your daily cost as the sum of your base rate and the rate at which you rack up miles driven. If you have a long commute, it probably isn’t the ideal solution, and it’s not available in all states, but it could work.
Pay-per-mile coverage provides the same protections as a conventional plan, such as liability, collision, and comprehensive coverage. The data can also be shared with Allstate to help improve their services. The insurance premium you pay may also be affected by the car you drive, but this is not always the case.
The cost of collision and comprehensive coverage naturally rises in proportion to the car’s market value. However, the inverse is also true; the likelihood of a liability decreases with the age and luxury coverage of your vehicle.
Conclusion
If your current car insurance premiums are too high for your budget, do some comparison shopping to discover a rate that better suits your needs, taking into account such things as the type of driver you are, your credit history, and the make and model of your vehicle.
You can evaluate deals based on factors including monthly rate, multi-vehicle discounts, and fees for added drivers. You can also inquire with your current insurance company about possible discounts and savings programs to assist lower your car insurance premiums.
