Your Guide to Government Sponsored Car Insurance
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A government-sponsored car insurance policy is designed for drivers who may not be able to afford traditional insurance. Often, these drivers will forgo paying their car insurance because of more pressing responsibilities like rent, food, and utilities. Government auto insurance can offer cheaper rates than other car insurance companies, which can help make car insurance more affordable allowing them to be protected while behind the wheel.
Government-sponsored auto insurance works like any other insurance; the difference is you’ll typically get cheaper rates than most private car insurance companies can offer.
So, is government sponsored car insurance right for you? Do you qualify? Keep reading to find out.
State Government Insurance Programs
Currently, only a few states offer low-income drivers help to pay for their car insurance. Those states are California, Hawaii, and New Jersey. Remember, it is illegal to drive a vehicle without proper insurance in these states, but for those struggling financially, maintaining car insurance may be hard to do.
If you live in one of these states and are experiencing difficulty affording car insurance, you may qualify for one of these programs, especially if you currently receive government assistance.
Those who receive health care coverage through the Federal Medicaid program or other financial assistance from the state or Federal government may qualify as low-income residents.
Below is a breakdown of how these programs work, state by state.
California Low-Cost Auto Insurance Program
The California Low-Cost Auto Insurance Program was created to assist income-eligible residents in affording the state’s minimum liability insurance coverage. This coverage provides affordable insurance to help income-eligible drivers meet mandatory auto insurance requirements.
How to Qualify for This Coverage:
- Be a California resident
- Have a valid California driver’s license
- Meet income eligibility guidelines
- Own a vehicle valued at no more than $25,000
- Be a new driver or have a good driving record.
In most cases, you can add uninsured motorist bodily injury coverage, which covers your passenger’s medical expenses, or the other driver, if the other driver is at fault and doesn’t have insurance.
Medical payments coverage may also be available to cover any medical bills you or your passengers have if you’re involved in a car accident that you did not cause.
Remember that comprehensive insurance is not covered, which includes damages to your vehicle not caused by a collision—such as theft, hitting an animal, weather-related events, or vandalism. Towing and rental car reimbursement are also not covered.
Hawaii Assistance to the Aged, Blind and Disabled
The Department of Human Services offers a program called Assistance to the Aged, Blind, and Disabled. This program provides free auto insurance to residents who meet specific guidelines.
How to Qualify for This Coverage:
- Be a resident of Hawaii
- Be a U. S. citizen.
- Have a valid Hawaii driver’s license
- Be 65 years of age or older.
- Have income below 34% of the poverty line
- Receive federal or state supplemental income or assiance
New Jersey Special Automobile Insurance Policy
The Special Automobile Insurance Policy offers a medical-only insurance policy for just $1 per day. Unlike the other insurance options listed above, this is not a vehicle liability policy but rather a policy to cover severe emergency treatment medical costs such as brain or spinal cord injuries that result from a car accident.
It does not cover outpatient visits to your doctor or vehicle or personal property expenses regardless of who is at fault.
How to Qualify for This Coverage:
- Be a New Jersey resident
- Have a valid New Jersey driver’s license
- Own a vehicle with a valid vehicle registration
- Be enrolled in an eligible Medicaid program.
What Does Government Sponsored Insurance Cover?
In California, Hawaii, and New Jersey, driving a car without the minimum liability insurance coverage is illegal. If you get caught driving without minimum coverage, you may face costly fines, fees, and jail time. Even worse, if you caused an accident that resulted in injuries or property damage, the ramifications can be financially devastating.
These liability-only insurance policies help cover costs related to damage you caused to another person’s vehicle or property. However, they limit how much they will pay per person injured and per accident.
Liability insurance policies provide two basic auto insurance coverage types. They are bodily injury liability coverage and property damage liability coverage.
- Bodily injury liability coverage may pay for the injured person’s lost wages and bills of the other driver due to an accident that you caused. It may also cover costs in cases of death or legal disputes.
- Personal property damage liability coverage will protect against damage you caused, including damage to their car, home, or other property such as a fence, mailbox, etc.
What Happens If I Drive Without Liability Car Insurance
Driving without auto insurance is a misdemeanor in most states. Here are some of the potential legal consequences of driving without your state’s minimum car insurance coverage requirements.
- Fines. If you’re caught driving without insurance, you could face costly penalties. Depending on your state and driving record, these fines can cost up to $1,750 or more.
- License suspension or revocation. Your driver’s license may be suspended or revoked. Hence, making it impossible for you to operate your vehicle or any other vehicle legally.
- Vehicle registration suspension or revocation. Without a valid registration, you cannot operate your vehicle, nor can anyone else drive it.
- Vehicle impounded. If your car is towed and impounded, you may not be able to retake ownership until you obtain the proper insurance. You will also be responsible for the costs of towing and storing your vehicle.
- Jail time. Depending on the circumstances and your driving history, you may face up to a year in jail for not maintaining the proper insurance on your car.
- Fees. In addition to the costs to remedy the breach for the lack of insurance coverage, you may be required to pay additional fees and penalties throughout the process. These costs may include court and reinstatement fees.
If the legal fees aren’t enough to cause you a steep financial setback, here are some other expenses associated with driving without insurance, specifically if you’re involved in an accident that you may or may not have caused.
- Increased insurance rates. You can expect to see higher insurance rates when searching for car insurance. Insurance companies may penalize drivers who have gaps in their auto insurance coverage with elevated insurance premiums.
- Car repair bills. If you are involved in an accident that you caused, you may be solely responsible for the costs to repair the other driver’s vehicle. You will also be responsible for the repairs to your car.
- Medical expenses. When a driver is injured in an accident that you caused, they will likely seek medical attention for their injuries. You could be responsible for all of their medical costs, even if they have insurance.
- Lost wages. If the driver of the car you hit was injured and couldn’t work, you might have to pay them for their missed wages.
Other Ways to Find Cheap Car Insurance
Don’t be discouraged if you don’t live in a state that offers government-sponsored car insurance or if you don’t qualify for the programs in Hawaii, New Jersey or California. Here are other ways you can get affordable car insurance where you live.
Compare Insurance Quotes. Shopping around for car insurance is one of the best ways to get an idea of what your options are and find the cheapest rate. Because each person’s insurance requirements are different, shopping online and submitting your information to compare the best rates is well worth the time investment.
At Compare.com we help our customers save an average of $720/year on car insurance by comparing rates of 65+ auto insurance companies. You can get your cheap quotes within a matter of minutes. Just enter your zip code below to get started.
Use Your Affiliations. Do you belong to a professional or civic organization? Are you a member of AAA or AARP? Because many of these companies have large memberships, insurance companies offer savings to their members. Being associated with a group or organization can save you money.
Get Insurance Discounts. Are you a college student and getting good grades? Have you maintained a decent driving record? Can you combine your auto insurance and renters insurance under 1 policy? These are just a few ways you can easily save up to 40% on your auto insurance. Take advantage of some common auto insurance discounts to save on your premium.
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