What to Do If You Can't Afford Car Insurance

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Car insurance rates are expensive, but factors like your driving record, age, vehicle type, and even your state determine your auto premiums. While maintaining a clean driving record and choosing a safe vehicle is mostly under your control, factors like age and location aren’t.

Since most states require auto insurance — and driving is necessary for most Americans — finding ways to save money is crucial. This article covers the best options to lower your monthly payments and explains why maintaining coverage is so important.

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7 Ways to Lower Your Car Insurance Payments

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Though car insurance is expensive, you have a few ways to save money on your policy. Some earn you savings right away, while others have long-term benefits. Let’s go over each strategy.

Ask about discounts

Car insurance discounts are a great way to lower your premiums. Some of the best discounts that’ll provide you with noticeable savings include:

  • Telematics: You can receive a discount for allowing your insurer to monitor your driving habits. By practicing safe driving, you can save up to 40%.
  • Safe driver: You can save up to 30% with this discount if you maintain a clean driving record. That means no tickets or at-fault accidents in your recent driving history.
  • Multi-policy: You can get up to 30% off your premiums for having more than one insurance policy (also known as bundling) with the same company.

Keep in mind that savings and discount availability depend on the insurer.

Change your coverage limits and deductibles

Lowering your coverage limits also lowers your premiums. But you should consider changing these limits carefully. Lower limits open you up to more financial risk if you get into an accident and the damages you cause exceed those limits.

You can also lower your rate by raising your deductible (what you pay out of pocket during a claim). For example, switching from a $250 deductible to a $1,000 can save you around $138 per six-month policy, according to Progressive. Just know that raising your deductible means paying more out of pocket if you file a claim.

Finally, if you drive an older car worth less than $5,000, you might consider dropping comprehensive and collision coverage. But keep in mind you’ll need to cover the cost of replacing your vehicle if it’s totaled.

Consider usage-based car insurance

Usage-based car insurance is another way to lower your auto insurance. Your insurer will reduce your rates based on your driving behavior. Here are two types of usage-based car insurance policies.

  • Usage-based insurance (UBI): Tracks how you drive and charges a rate based on driving habits. If you’re a safe driver, you could save up to 40%, depending on your insurer.
  • Pay-per-mile Insurance: Tracks only how many miles you drive and charges a base rate plus a per-mile fee. It’s suitable for low-mileage drivers and can save you up to 47%.

Here are some of the most common usage-based programs:

Check your eligibility for state-funded programs

You can check to see if your state offers a state-funded program to lower your insurance costs. State-sponsored programs provide auto insurance to low-income drivers who can’t afford standard coverage. Several states, like California and New Jersey, offer low-income car insurance programs.

Eligibility for the California Low Cost Auto Insurance Program (CLCA) and New Jersey Special Automobile Insurance Policy (SAIP) programs include income thresholds and eligibility for government assistance programs like Medicaid or food stamps.

Improve your driving record

The difference in car insurance rates between drivers with a clean driving record and people with tickets or accidents is huge. Here are the average rates based on Compare.com data.

Driving Record Average Monthly Premium
Clean record $135
Speeding ticket $161
At-fault accident $167
DUI $198

Car insurance companies see drivers with less-than-perfect records as riskier to insure than drivers with clean records. Safe drivers also often earn additional discounts — that’s why it’s crucial to improve your driving record. If you have tickets or accidents, keep a clean record going forward. Your rates should drop within one to three years.

Work on your credit

Your credit also affects your rates. People with excellent credit get much cheaper rates because insurance companies correlate good credit with a lower chance of making a claim.

Here’s how average rates change based on your credit history.

Credit Tier Average Monthly Premium
Excellent $110
Good $133
Average $136
Poor $147

Poor credit typically won’t prevent you from getting car insurance, but improving your credit by paying your bills on time and lowering your credit use can lead to better insurance rates in the future.

Shop for new insurance

Shopping around and comparing insurance rates helps you find the most affordable auto policy. You can uncover discounts, compare coverage types and limits, and more. Shop at least every six months so you never miss a rate drop — and use an insurance comparison site to save time.

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Why You Need Car Insurance

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Car insurance has several benefits, but driving without it comes with serious drawbacks. Let’s review the most important reasons for having coverage.

Car insurance is state-mandated

In most states, you must have car insurance to drive legally. Most states require you to purchase at least liability coverage, which protects others from damages you cause. Some states may also require you to buy extra protections like medical coverage for yourself and your passengers or uninsured motorist protection.

Lenders and lease companies require car insurance

If you finance or lease your car, you need car insurance to stay compliant with your lending or lease agreement. In addition to liability coverage, your lender or leasing company may require you to have:

  • Collision coverage: Pays for damages to your vehicle if you’re at fault for an accident.
  • Comprehensive coverage: Pays for non-collision damage to your vehicle, such as hail damage.
  • Gap coverage: Pays for the difference between your vehicle’s market value and the amount you owe on your car loan or lease.

Car insurance provides financial and legal protection

Car insurance protects you and your passengers if you get into an accident. It covers you against financial losses, protects your vehicle, and can pay for expenses such as some of your legal bills, such as attorney fees, when you’re liable for an accident.

What Happens If You Don’t Pay Your Car Insurance Premium

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If you miss your car insurance payment, your insurer will typically take the following steps:

  • Notify you of your missed payment by email or mail
  • Allow you a seven- to 15-day grace period to pay your bill
  • Charge a late fee

But if you don’t pay it during the grace period, your insurer may cancel your policy and charge you extra fees. If your insurer cancels your policy, your insurance will lapse, which can cause issues with your lender or leasing company and increase future car insurance rates.

Your insurer can notify credit-reporting agencies of your late payment after 30 days and send unpaid bills or fees to a collection agency.

You may be able to reinstate your policy, but it’s up to your insurance company. If you’re having trouble paying, the best thing to do is notify the company immediately and work with an insurance agent to keep your coverage.

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Affording Car Insurance FAQs

If you’re struggling to pay for auto coverage, you probably have questions. Here are answers to the most common questions about affording car insurance coverage.

Do you still need car insurance if you don’t drive often?

Yes. In most states, you always need car insurance to drive legally. Even when it’s not required by law, having a policy is always a good idea because it protects you from financial loss liability.

Consider a low-mileage discount or pay-per-mile policy to save money if you don’t drive often.

Will not paying your auto insurance affect your credit score?

It can. When you fail to pay your car insurance premium, your insurance company can cancel your policy for non-payment, leaving you without coverage.

If you have any unpaid amount left, your insurer can also report late payments to credit reporting agencies and send the bill to collections.

What types of car insurance are mandatory?

Liability insurance is mandatory in every state but New Hampshire. Some states also require uninsured and underinsured motorist protection and medical coverage like personal injury protection (PIP) or medical payments (MedPay).

Lenders and leasing companies usually require you to have collision and comprehensive coverage as well.

What happens if you’re caught driving without car insurance?

It depends. Penalties for driving without insurance vary by state but usually include fines, license suspension, registration suspension, court fees, filing of an SR-22 (proof of insurance), vehicle impoundment, and reinstatement fees.

Your car insurance rates will also increase if authorities catch you driving without the mandatory coverage required in your state.

Can you temporarily suspend your auto insurance if you can’t afford it?

It depends. You may be able to temporarily suspend your auto insurance, but it hinges on if your insurance company allows it. You can park your car and cancel your policy for a short period or switch to a car storage insurance policy. Lenders and leasing companies usually don’t allow you to cancel coverage altogether.


Data scientists at Compare.com analyzed more than 50 million real-time auto insurance quotes from more than 75 partner insurers in order to compile the rates and statistics seen in this article. Compare.com’s auto insurance data includes coverage analysis and details on drivers’ vehicles, driving records, insurance histories, and demographic information.

All the rates listed in this article have been collected from a combination of real Compare.com quotes and external insurance rate data gathered in collaboration with Quadrant Information Services. Compare.com uses these observations to provide readers with insights into how auto insurance companies determine their premiums.


  1. California Department of Insurance, “California’s Low Cost Auto Insurance Program,” accessed April 4, 2024.
  2. New Jersey Department of Banking and Insurance, “Special Automobile Insurance Policy (SAIP),” accessed April 4, 2024.

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