What to Do If You Can't Afford Car Insurance
If you can’t afford insurance for your vehicle that meets your state requirements, you can’t legally drive it. Choosing to drive without insurance can result in unwanted consequences, including license suspensions, fines that can run thousands of dollars, or even jail time.
While some states don’t require vehicle insurance, someone can sue you if you’re at fault in an accident. The truth is if you can’t afford insurance, you should avoid driving your car for now. Read through this article to get some ideas about how to afford insurance so you can go back to a life of freedom.
What Happens If I Don’t Pay My Car Insurance Bill?
If you fail to pay your car insurance bill, it will cause the policy to lapse. A lapsed policy means you no longer have insurance coverage. It also means driving your vehicle is illegal in most areas. Choosing to do so anyway can result in severe consequences.
When you can’t afford insurance for your car, a lapse can be more serious than you might expect. If you let a bill pass by, it can affect your ability to get insurance later down the road. When you choose to go to a new insurance provider, they will see you had a gap in your coverage. Unfortunately, this means you will often pay a higher premium as a result.
You don’t need to panic, especially if you’ve only missed one payment. There are typically options you can take advantage of before you have your policy canceled due to nonpayment.
Many car insurance providers will offer a grace period after you miss a payment. Depending on the insurance provider and your state, the grace period might be somewhere between 10 and 25 days before they cancel your policy. If you still can’t afford the payment, they’ll notify you that your policy is no longer active.
If the policy is canceled because you can’t afford insurance for your vehicle, you can contact the provider to reinstate your policy. Doing so requires you to pay your entire past-due balance before getting the original policy back without evidence of the lapse. You may also need to pay a reinstatement fee.
However, insurance companies don’t have to offer reinstatement, but you should always see if it’s possible.
What Should I Do If I Miss a Payment?
If you can’t afford insurance, you should first get in touch with your insurance provider. Not paying the amount due can be a costly mistake, so finding a way to pay what you owe is the best option available. If you’ve forgotten to make a payment, do it now. Otherwise, find alternatives to pay what you owe as quickly as possible.
Talking directly to the insurance company is crucial to understand your options. Some insurance providers will quickly cut off your policy, while others may be understanding about your situation. For instance, a company might charge you a late fee as long as you can pay what you owe within a reasonable amount of time.
Why Do You Need Car Insurance?
When you can’t afford insurance to drive legally, you might wonder if it really matters. The short answer here is insurance is crucial. All but 2 states require car insurance to drive legally.
Below are several reasons you need car insurance, even if you’re going through challenging times financially:
- Insurance might be mandatory – Most states require a certain amount of liability insurance. Not having it makes it illegal for you to drive your car. Driving illegally can lead to hefty fines, jail time, suspended license, or other consequences.
- Insurance is a form of protection – In the event of a car accident, you might be held fully responsible for all associated costs. These include everything from lost income and medical expenses to legal fees, damages, and more. Insurance will help pay these costs and prevent you from having to pay out of your pocket.
- Lenders may require car insurance – When leasing or financing a vehicle, many lenders require you have comprehensive and collision coverage. This coverage protects their interest since they still own the car as long as you are making payments.
How Car Insurance Premiums Are Calculated
What you’ll pay each month for car insurance depends on several factors. The coverage you have available, where you park your car, and accidents you had in the past are all essential to determine these costs.
However, the most important factors are the following:
- Driving record – if you have an excellent record, your premiums will be lower. However, those with severe traffic violations or accidents will typically pay more for auto insurance. New drivers who don’t have an insurance history will also pay more than others.
- Car usage habits – Those who drive more miles will also have a higher insurance premium. The more the car is in use, the more likely it will be involved in an accident. Expect higher payments if you commute long distances or drive several places every day.
- Location – Cities have more theft, vandalism, and accidents, so urban drivers have higher insurance bills.
Beyond these three factors, the car you drive, your demographic information, and other things will come into play when calculating your insurance premiums.
How To Lower Your Car Insurance Premiums
If you can’t afford insurance, you should take steps to change that. The good news is there are many options available to you.
Ask About Discounts
Are there any discounts available through your insurance provider? It never hurts to ask. For instance, some insurance companies will offer lower premiums when several vehicles are under the same policy.
If you have a device in the car that makes theft less likely, that could cut your bill down. The same applies to adding safety features to your vehicle. Get in touch with your insurance provider to see if you can lower costs through available discounts.
Find Out If You Qualify for State-Sponsored Insurance
In some locations, state-sponsored insurance is available to a select population. However, this may or may not be the case where you reside. If you can’t afford insurance, this could be the optimal way to continue driving legally without depleting all of your funds each month.
Some areas offer state-sponsored auto insurance at a lower rate than other insurance options. However, you should still shop around to be sure you understand your options. If your state does provide this, find out whether you qualify. Typically, these programs are for those with low income, so not everyone will be eligible.
Adjust Your Coverage Levels
If you still can’t afford insurance, you could consider cutting down on coverage for your vehicle; doing so is especially helpful if you have an older car. Make sure you keep the state-required amount of liability coverage while dropping or limiting you collision and comprehensive coverage.
For those with a car worth more than 10 times their premium, this coverage may not be saving you money anyway. Visit a bank or auto dealer to find out how much your vehicle is worth. You can also visit Kelley’s Blue Book to get this information online.
Raise Your Deductible
When you can’t afford insurance, you might wonder why you would raise your deductible. However, there’s a good reason for it. When you have a higher deductible, your monthly premiums tend to go down. Sometimes the savings can be substantial.
Increasing the deductible by even a few hundred dollars can cut costs by 15 to 30%. An even higher deductible creates more savings. The important thing is to ensure you have savings to pay the deductible if you need to file a claim.
Take a Driver’s Safety Course
When you can’t afford the insurance you need, taking a simple driver’s safety course can help. While not every insurance company offers lowered premiums based on doing so, many do. Check with your provider to see whether this is an option available to you. These courses are straightforward and can offer savings that make payments more reasonable.
A driver’s safety course can also help in other ways. For example, you’ll learn ways to avoid accidents, become more confident behind the wheel, and get information about state-specific laws. These things can make you a better driver, so you’re less likely to be pulled over or end up in an accident.
Get Usage-Based Car Insurance
Usage-based insurance is new auto insurance that bases the cost on how safely you drive. Your insurer collects data as you drive. They use that data to determine whether you’re eligible for a discount based on being a great driver.
Many drivers with usage-based insurance save on their premiums. Safe drivers who only infrequently spend time in the car tend to get the most considerable savings. In most cases, the insurer only uses the data from the vehicle to determine discounts, not to raise your rates.
Trade-In Your Vehicle for Something More Affordable
If you still can’t afford insurance, it might be time to choose a different vehicle. Less expensive or older cars will often have a lower premium. The insurance premium is lower because it’s based on the price of the car, what it costs to repair it, how safe it is, and how likely it is to be stolen.
A shiny expensive car isn’t worth it if you can’t afford insurance to drive it. It’s better to trade it in for something more affordable. That way, your insurance rates drop, and you’re paying less for your vehicle, so it’s a win-win.
How To Find Cheaper Car Insurance
Hopefully, the tips above will help you afford your car insurance. You can also use the steps below to acquire cheaper insurance that protects you against accidents and other issues. Some of these things are simple, while others will take less time, but they’re all designed to make car insurance more affordable.
Improve Your Driving Record
Every insurance provider is going to look at your driving record. If it’s not great, you’re likely to have higher premiums than someone with a clean driving record. While it will take time and effort, improving your driving record is an excellent way to make your insurance bill more affordable each month.
First, take a look at your driving record. If you find errors or want to dispute items, speak with the Department of Motor Vehicles in the state where you reside. Also, pay for tickets quickly whenever you receive one.
Improve Your Credit Score
When you can’t afford insurance for your car, not just your driving record will be scrutinized. You also want to consider ways to improve your credit score. Those with lower scores tend to have higher payments on car insurance premiums.
The three most significant ways to make an impact include:
- Paying your balances on time.
- Paying down credit cards, so your usage remains under 30%.
- Keeping your accounts open even when you don’t use them.
If you have lots of debt, a consolidation program can make it easier to handle the payments to get you back on track.
Look for Better Discounts
You might not have access to every auto insurance discount through your provider. Sometimes, changing to a different company provides additional discounts. It’s well worth finding out. The more discounts you bundle, the less you pay on your insurance when the bill comes.
Discounts can help you keep costs low while rewarding you for the safety features of your car and classes you might have taken in the past. Keep in mind discounts vary, so do some research to determine what options are relevant to you and your driving history.
Shop Around and Compare Rates
Above all else, if you can’t afford insurance, you should shop around to find out what rates are available to you. Visiting a comparison website like Compare.com is an easy process. All you need to do is provide a few details about yourself, your car, and your driving record.
Within just a few minutes, we’ll provide you with a selection of auto insurance policies that meet your needs. You can easily compare them to one another to find the best insurer for your needs. So give it a shot and make worries over insurance payments a thing of the past.
Affordable Car Insurance FAQs
What happens if you can’t afford insurance?
If insurance is too expensive, get in touch with your insurance company. You may have a grace period to resume payments. After that, consider choosing a bare-bones insurance policy that has a lower cost every month.
Is it illegal to drive without insurance?
It depends on your location, but in many cases, the answer is yes. Driving without insurance or an alternative form of protection is illegal and can result in fines, a suspended license, or jail time.
Am I still insured if I miss a car insurance payment?
Your insurance company may cancel your policy when you miss a payment. However, many will reinstate it if the coverage didn’t lapse for more than 30 days. Frequently failing to pay your insurance can lead to the company canceling your policy.
How do people afford car insurance after an accident?
After an accident, car insurance rates often rise, which makes it hard to make payments. This increased premium usually lasts three to five years. Consider switching insurance companies or cutting down on coverage to make your bill more manageable.
Is there an alternative to getting car insurance if I can’t afford it?
Some states allow driving without insurance. But in most locations, your alternatives include self-insurance, securities or cash, or a surety bond. However, this is not possible in all areas, so make sure it is legal where you are.