How To Get Cheap Car Insurance For Low-Income Drivers in 2023

Why You Can Trust Compare.com

At Compare.com, it’s our mission to find simple ways to help our customers save money on the things they need. While we partner with some of the companies and brands we talk about in our articles, all of our content is written and reviewed by our independent editorial team and never influenced by our partnerships. Learn about how we make money, review our editorial standards, and reference our data methodology to learn more about why you can trust Compare.com.

Written by Nick Versaw Edited by Quiana Darden Reviewed by Amanda Clear

Updated October 18, 2022

In this Article:

• How Does Income Affect Insurance Rates?
• State-Sponsored Programs for Low-Income Drivers
• Other Low-Income Car Insurance Options
• Discounts for Low-Income Drivers
• Low-Income Car Insurance FAQs

How Does Income Affect Car Insurance Rates?

It’s illegal for insurance companies to charge you more for car insurance based on your income, but drivers who earn less often pay more because of their job, credit score, neighborhood, or education. Having lower earnings connects these factors even though no insurer can technically change your rate when you simply make less money than another policy seeker.

Still, insurance companies are allowed, by state law, to increase your car insurance rate based on where you can afford to live, the financial decisions you need to make, and the kind of work you’re qualified to do. Learn to collect cheap quotes from Compare.com, join state-funded programs, change your policy, and improve your profile to decrease your monthly or annual payments in our latest guide below.

And if you just want to see exactly how much you’ll be asked to pay for car insurance, enter your ZIP code below and get free quotes from dozens of companies at once.

Cheap Car Insurance for Low-Income Drivers: 2023 State Programs and Rates

Nearly every state legally requires car insurance, but many low-income households with multiple earners struggle to pay steep premiums each year. Only California, New Jersey, and Hawaii offer special programs to make car insurance more affordable, but these government programs help many low-earning drivers and families secure car insurance, make premiums more reasonable, and increase their ability to comfortably keep good coverage. 

Government-sponsored Car Insurance

If you live in California, New Jersey, or Hawaii, explore the requirements and benefits of government-sponsored car insurance. You’ll see how you can lower the cost of insuring your vehicle and protect yourself from state fines and serious risks by driving without legally-required coverage.

California’s Low-Cost Auto Insurance Program (CLCA)

Because they require every driver to carry liability protection, the state established the California Low-Cost Automobile Insurance Program (CLCA) in 1999 to help low-income residents get affordable rates. The state government cared that too many drivers couldn’t insure themselves or meet legal requirements because of the premiums for where they lived, their credit history, education, and more. 

By earning less than $32,200 per year as a single person, you are eligible for this low-cost auto insurance program. A couple can earn $42,550 annually, and a three-person household can make up to $54,900 every year. See the CLCA FAQ for allowed income limits. (Receiving some state benefits like food stamps and welfare will automatically qualify your earnings.)

If you fall under the above income levels, your eligibility depends on your age, license status, driving record, car value, and whether your car is only for personal use. In addition to being at least 16 years old and having a valid California driver’s license, you must have a good driving record. The program will also not cover commercial cars such as vehicles used for delivery, landscaping, or ridesharing. 

CLCA gives as much as $10,000 in protection for each person injured in an accident up to $20,000 in total. The state offers $3,000 for property damage as well. Alongside the minimum liability insurance that a California driver must legally carry, the insured can choose additional options for bodily injury to an uninsured driver as well as medical payments.

Visit MyLowCostAuto.com to complete their questionnaire for the quickest way to see if you qualify. 

New Jersey’s Special Automobile Insurance Policy (SAIP)

To help underinsured drivers enrolled in Federal Medicaid with Hospitalization, New Jersey’s Special Automobile Insurance Policy (SAIP) gives limited auto insurance to low-income individuals and families. If enrolled, most insurance agencies can determine whether you meet New Jersey’s eligibility requirements by using your Medicaid ID, since not all forms of state medical insurance qualify for SAIP. 

A low-income, eligible person with a valid license and registration pays only $365 per year to receive as much as $250,000 in emergency treatment after an accident. Though it includes a $10,000 death benefit, SAIP doesn’t include liability, collision, or comprehensive insurance, meaning it won’t help with injuries to others or damage to your car.

To search for an insurer, visit the Personal Automobile Insurance Plan (PAIP) finder tool. 

Hawaii’s Low-Cost Disability Auto Insurance Program 

As part of their Assistance to the Aged, Blind, and Disabled (AABD) program, Hawaii uniquely provides free car insurance to those who live 34 percent or more under the federal poverty level. 

In other words, if you earn less than $2,000 as a single person or $3,000 with a partner, you qualify for this free auto coverage. Even if you make slightly more, you can still qualify if you’re older than 65 or have a disability according to the Social Security Administration.

Hawaii’s free auto insurance coverage meets state mandates for all drivers, including liability coverage up to $40,000 per accident, $20,000 for each injured person, and $10,000 in property damage liability. 

Other Programs for Low Income Car Insurance

While only three states offer state-funded car insurance programs, a few others, like Maryland and Pennsylvania, try to lessen the burden of high premiums and lower barriers to decent coverage for low-income drivers. 

Maryland’s Automobile Insurance Fund (Maryland Auto)

If you are unable to get car insurance privately due to a lower annual income, the Maryland Automobile Insurance Fund (Maryland Auto Insurance) can help you get liability or full coverage car insurance. 

To qualify, two private insurance companies must reject your application. Otherwise, you can show an insurance company canceled your policy or rejected a renewal. Running like a private insurance company, Maryland Auto Insurance offers quotes and coverage online. 

CURE

In Pennsylvania and New Jersey, you can get car insurance without the factors that typically come with earning less than others. Since location, creditworthiness, education, and even occupation usually increase premiums, Citizens United Reciprocal Exchange (CURE) cuts your rate by using your driving record to make quotes. Safe drivers with a low income enjoy much lower auto insurance rates without having companies looking at their location or credit history. 

CURE auto insurance offers two plans to span liability, collision, and comprehensive insurance for uninsured motorists and personal injury protection (PIP). With optional add ons, the “Basic” policy covers $10,000 in medical payments, $15,000 in personal injury, and up to $5,000 in property damage. Under the “Standard” policy, CURE-insured drivers have their choice of liability insurance and protection like adding $10,000 more for bodily harm. 

Discounts Available to Low-Income Drivers

If you can’t qualify for state-run low income car insurance programs or don’t live in one that will help, you can reduce your insurance payment through payment plans, your employer, driving record, and vehicle. Remember to weigh your car insurance options, and learn ways to lower your premiums through these discounts. 

Below are a few ways that can help you save money on your monthly car insurance bill:

Pay-In-Full Discount

By paying for several months or the whole year outright, most companies will give you car insurance discounts. When it’s possible, your all-in payment promises the insurer that you won’t lapse on your coverage during that period. Your policy also won’t require a payment process each month to maintain your policy, saving potential fees.

Job-Related Discounts

Nurses, teachers, federal employees, military personnel, and many other workers receive discounts on their auto insurance simply because of the service they perform. Some jobs, like teaching and being in the military, reduce their payments because their occupation makes them lower-risk drivers. Insurance companies favor other roles as well and may lessen the burden of insurance when you are unemployed or retired. 

Safe-Driver Discounts

Insurers weigh your driving record heavily when calculating your car insurance rates. With fewer traffic tickets and accidents, you can save hundreds of dollars every year. Even if you do break traffic laws or get involved in an accident, reducing negative marks on your record through traffic school will also help decrease your payments. At the end of the day, good driving habits means cheaper rates, regardless of your income.

Bundling Discounts

Since you might already carry another kind of insurance, bundling your policies can unlock savings. For example, keeping home and auto insurance under one company can, in some cases, give you an impressive combined discount on both policies. This can potentially save you hundreds of dollars every year (in addition to the $720 users of Compare.com save on average..

Vehicle Option Discounts

Certain vehicle safety features can cut your premiums on parts of your policy, like injury and collision coverage. For instance, when your vehicle includes dual airbags and anti-lock brakes, insurers may reduce your payments. They may even save by owning an electric or hybrid car. See how your vehicle compares by getting dozens of quotes for free.

Other Ways Low-Income Drivers Can Save on Car Insurance

Every insurance premium is unique to the company and your personal situation. While having less income can hurt your chances at a fair rate, making good choices while you shop for quotes and choose your coverage options can lower your overall car insurance costs. In fact, you can shrink an insurance company’s hesitation and get better rates in several different ways. 

Compare Car Insurance Rates

The same coverage from one company will fetch a much different rate from another. The cheapest car insurance in your state can cost half as much as coverage from a more expensive company. Someone with poor credit or living in a low-income neighborhood will see dramatic differences from someone in another area or with fewer financial difficulties. The only way to know if you are getting the best rate for the policy you need is to check your rates and get accurate quotes.

To see how much you can save (the average Compare.com user unlocks more than $700 in annual savings), simply enter your ZIP code below. In just a few minutes, you’ll be comparing the cheapest rates from dozens of the top insurance companies in your area — all for free!

Avoid Lapses in Coverage

If your car coverage lapses, insurance companies will assume you are more risky, and therefore more likely to be in a car accident or file a claim. More risk means a higher rate even if you reinstate with the same insurer. To avoid this spike in the price of insurance, only accept a payment and policy level you know you can make. 

And if you can’t afford your new rates, shop around and get car insurance quotes from other insurers. It doesn’t cost you anything to shop around and, although they won’t want to admit it, you can switch insurance companies at any time.

Consider “Non-Standard” Insurance Companies

Smaller, lesser-known companies like Direct Auto, Dairyland, and GAINSCO attract new and lower-income customers by competing on price. Undercutting insurance giants like Farmers and Allstate, non-standard insurers offer lower-income, higher-risk drivers more competitive prices. In some cases, they have more flexible policy options and income-kind rules. 

Look into Pay-Per-Mile Car Insurance

Low-milage, usage-based or pay-per-mile insurance can get you full coverage for a premium that decreases with less driving. Because the likelihood of filing an accident or damage claim bottoms out with minimal time on the road, you’ll usually receive discounts on your car insurance when you don’t go over the monthly mileage limits. 

Better yet, pay pennies for every mile after a base rate through a pay-per-mile policy. Low-income earners (like remote workers, students, and the retired) save hundreds by driving less than the 12,000 annual American average.

Take into Consideration What Car You Drive

Driving a Subaru or Toyota will greatly reduce your insurance bill compared to the same policy for a Mercedes or BMW. For low-income drivers, this means they sometimes save with the car they own, but each make and model sends insurers a different message. If you take the model into account when buying your vehicle, you’re prepared to pay less to your insurance company and put more money in your pocket.

Reduce Your Coverage

Choosing to cut or drop parts of your policy lowers your insurance premium. Cars of lesser value may only need the minimum coverage for their home state’s motor laws, so low-income drivers often decide to drop collision or comprehensive coverage when the annual cost is more than the cost of repair after an accident.

Since insurance companies will never pay more than your car is worth, it can make sense to save the money you would pay for insurance benefits you’ll never see. When you get accurate quotes for the smartest coverage, Compare.com’s insurance can help you save about $720 per year. 

Pay for Claims Out of Pocket

Though insurance always aims to protect you financially, insured drivers (especially low-income policyholders) should file claims only when absolutely necessary. Sometimes paying for the cost of minor damage, reasonable repair, or a small accident out-of-pocket can save you money by ensuring your rates won’t go up. 

Claims increase your premium, even when adjusters deny them. Drivers with previous accidents and tickets run the risk of a denied claim and price jump anyway. Minor damage and slight self-injury should also spark thinking twice about claiming your benefits. 

Take a Defensive Driving Course

Defensive driving courses can dismiss tickets, subtract negative points, and, as a result, significantly lower your car insurance costs. Generally affordable, these online, classroom, and behind-the-wheel courses provide potentially life-saving skills while landing discounts from insurance companies. 

Some states require insurers to reduce premiums after you complete the course, but decreasing your risk as a low-income driver through learning can only benefit you.

Clean up Your Driving Record

Your driving record details more than past accidents, violations, tickets, and fines. On your report, insurers also see negative license points and suspensions, as well as auto-related convictions like a DUI or DWI. Understand how insurers will see you by getting a copy of your driving record, especially after a driving course and three years after an incident. 

You can correct errors by contacting the DMV and remedy violations by proving to a judge that you fixed the infraction. Or, expunge negative marks and convictions like a DUI after a state-based period like seven years. After more recent traffic issues, you may also request to pay a fine rather than hurt your record if you stay infraction-free for a year or more. 

And always practice safe driving habits, regardless of how good or bad your record is. In addition to looking at your overall driving record, most insurance companies will offer good driver discounts, so driving safely and within the legal limits can save you big bucks at the end of each month or year.

Improve Your Credit Score

If you pay your minimums on debts, lower high balances on cards, and keep healthy numbers of accounts, you can raise your credit score. Through regular payments, aging accounts, and few inquiries, your credit also improves. Car insurance companies in many states seriously consider creditworthiness when adding up your premium. A better score means a lower rate (unless you live in California, Hawaii, or Massachusetts).

What Factors Affect Car Insurance Rates for Low-Income Drivers?

While your vehicle, age, gender, and driving record all affect the final premium, your income also changes the cost of car insurance through the neighborhood you can afford, the financial hardships you’ve endured, the education within your reach, and the kind of car you drive. More than that, insurance companies look at your driving and insurance history.

Below are just a few of the factors car insurance companies will look at when they calculate your final premium:

Your Credit Score

Many low-income drivers and families must make difficult financial decisions that can eventually raise premiums. If these pressured choices hurt their credit score, drivers with fewer resources also pay a higher price for car insurance. 

Insurance companies view creditworthiness as a sign of how likely you are to make a claim, cause a loss, and drive responsibly. As a result, applicants with lower credit scores often pay thousands more for the same car insurance as someone who hasn’t needed to draw debt, skip payments, or get creative to survive.

Fortunately, if you live in California, Massachusetts, or Hawaii, insurance companies aren’t legally allowed to use your credit score to calculate your insurance rates. But if you live anywhere else in the U.S., you may not be so lucky. 

Your Education

Education levels sway how insurance companies measure your risk and decide your rate. While many refuse to consider schooling in their estimates because of its bias, most drivers without a high school diploma will pay hundreds more than those with at least a GED. College graduates pay even less, and doctorates can get premiums 20 percent lower than someone who never graduated. 

Without a diploma or advanced degree, drivers pay $250 to $500 more, on average. Low-income policy seekers also can’t access education-based discounts.

Your Housing Situation

Owning a home gives insured drivers a real break. In addition to giving discounts to homeowners, they can also save by bundling their home and auto insurance policies. Sometimes these savings are slight, but insurance companies notice the responsibility, investment, and stability of those who buy a house and reward homeowners with cheaper insurance.

Where You Live

Premiums vary from area to area because insurers increase rates when a neighborhood poses more risk and produces more claims. If you earn less than others, you may be up against price hikes, especially with heavy traffic, poor roads, and larger populations. 

Other insurance concerns include crime rates and the security of your car, even when it’s parked. These local factors can increase costs dramatically. Because of this, low-income drivers trigger increases that make car insurance hard to get and even harder to afford.

What Kind of Car You Drive

Insurance companies study your car’s model. Some vehicles slap on higher rates because, in general, they get in more accidents. Insurers also consider its cost to repair, rates of violation, and its risk to others. Like a Jeep Wrangler, Ford Escape, or Chevrolet Equinox, the cheapest cars to insure suffer fewer accidents and have better safety ratings.

Your Insurance History

Like your driving record and credit history, negative signs like letting a policy lapse from non-payment will spike the price of car insurance. Past claims also raise your rate, and even previous policies can affect your premium. If you were insured by a high-risk company, for instance, a new insurer could decide you pose a greater risk and deserve a steeper bill.

Your Driving Record

Alongside accidents, tickets, fines, and violations, your driving history tells insurers the amount of risk you pose. Former suspensions, negative points, and auto-related convictions jack up premiums, but correcting errors and expunging hits can improve your driving background to drop car insurance costs. 

Even with a scratched history, drivers can remove bad marks by driving safely, taking courses, and waiting for infractions to expire.

Frequently Asked Questions

What can I do if I can’t afford car insurance?

First, don’t be discouraged. To see the cheapest policies already available to you, shop around for the car insurance rates and know that Compare.com saves drivers $720 every year on average. Once you find a good rate, explore discount options like taking driving courses and paying annually.

What happens if I miss my car insurance payment?

Lateness can mean major fees, and missing a payment—even for a day—can count as a lapse. If you need to renew the policy, your insurance company will likely increase the premium. Moreover, you can lose coverage altogether and face legal consequences for driving until you get new auto coverage.

How long does an insurance lapse stay on your record?

Insurance companies can flag every lapse in your car coverage indefinitely, so any lapse (whether for a day or a year) could stay on your insurance record for life. While some insurers allow more risk than others, missing payments and having policy gaps will surely multiply your premium and make getting good, cheap car insurance much more difficult.

Can I get car insurance with no deposit?

All car insurance policies require an upfront fee to get started. Luckily, many insurers aim at affordability and need as little as the first month’s premium. Once you pay the deposit, you become fully insured within the terms of your insurance plan. To stay active, just make the regular payment.

Is there government assistance for car insurance?

Only California, New Jersey, and Hawaii have car insurance mandated for low-income households and backed by their state government. While Maryland and Pennsylvania simply fund providers that act like private insurance, the others have laws to make car insurance accessible to low-income drivers and those eligible for assistance like Medicaid, food stamps, and Social Security.

Does paying monthly car insurance build credit?

Insurance companies care about credit history, but making your premiums won’t build your score. Though, using credit to pay your car insurance will help your score when you make the card’s payments on time and keep its balance low. Some insurers don’t allow this method, and you could face high interest if you don’t settle your balance in time.

Nick Versaw Insurance Managing Editor

Nick Versaw leads Compare.com's editorial department, where he and his team specialize in crafting helpful, easy-to-understand content about car insurance and other related topics. As an award-winning writer, Nick has seen his work published in countless renowned publications, such as the Washington Post, Los Angeles Times, and U.S. News & World Report. He graduated with Latin honors from Virginia Commonwealth University, where he earned his Bachelor's Degree in Digital Journalism.