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Vehicle Insurance for Low-Income Individuals

Categories: Insurance
Vehicle Insurance for Low-Income Individuals

Jay Stillman

5 min read

Car and truck accidents are not only traumatic, they can also be financially devastating. If you don’t have the proper auto insurance in place and you’re involved in an accident, you’ll receive expensive citations and you may be responsible for injuries or damages to the other party involved.

Before you assume you can’t afford auto insurance with a low income, it’s important to think about the financial consequences of not purchasing a car insurance policy before you drive. By exploring the resources available to you when purchasing auto insurance, you may be able to find an affordable policy that adequately protects you, your family, and your vehicle.

Car Insurance

There are many consequences for driving without car insurance coverage, including vehicle impoundment. If you’re in an accident without the proper car insurance, it may be hard to find a car accident lawyer willing to represent you if you’re at fault. While auto insurance may seem like another dreaded monthly expense, there are ways to find affordable coverage.

State-Sponsored Insurance Options for Low-Income Families

Some states offer government-sponsored auto insurance to car owners who qualify. For example, California offers low-income consumers a Low-Cost Automobile Insurance Program that allows them to purchase coverage through local insurance agents. To qualify, an applicant must own a vehicle valued at less than $25,000, have a valid California driver’s license, maintain a good driving record, and meet specific income eligibility guidelines.

New Jersey’s Special Automobile Insurance Policy (SAIP) provides medical-only auto insurance coverage to low-income car owners. To qualify, these applicants must already be enrolled in the Federal Medicaid With Hospitalization plan. While health insurance covers regular doctor’s visits, this auto insurance covers emergency medical treatments for auto accident injuries. It may be purchased through local insurance agents and costs $365 for a year of coverage.

Additionally, Hawaii residents who earn a low income may be eligible for financial assistance through the Assistance to the Aged, Blind, and Disabled (AABD) program, which they can use to pay for auto insurance coverage. To qualify, applicants must fall within the program’s income guidelines. Claimants must also be older than 65 and/or permanently disabled and not receiving federal financial assistance.

Shop Around for the Cheapest Rates

Whether you’re looking for motorcycle accident coverage or insurance for your truck, there are many auto insurance companies that provide coverage in each state. As a consumer, you have the right to shop your policy around to different companies to find the cheapest rates.

No matter the premium, choose a reputable company with satisfactory past customer reviews. When comparing policies between insurance providers, be sure you’re looking at the same coverages to make an accurate analysis.

When trying to save money on auto insurance, it’s tempting to lower your coverage or delete coverages from your policy. However, you must have specific coverage and limits to comply with state laws. For example, minimum auto insurance coverage in Tennessee includes the following:

  • $15,000 in property damage per accident.
  • $50,000 for injury or death per accident.
  • $25,000 for each injury per accident.

If you don’t purchase at least the state-required coverage, you may face fines, suspension of your license, or vehicle impoundment.

Purchase a Vehicle That Is Inexpensive to Insure

When auto insurance companies provide you with quotes for coverage, they’re analyzing your driving record, credit history, and the vehicles you want to insure. If you’re in the market for a car, consider purchasing an older model that’s less expensive. 

Your car insurance quotes may be lower with an older vehicle because if you’re in an accident, the replacement cost for your vehicle is lower. The auto insurance company is only required to pay you what your vehicle is worth in a covered total loss. Therefore, a less expensive vehicle means the insurance company won’t pay as much out of pocket if the car is totaled or stolen and must be replaced.

Reduce the Number of Cars You Own

If you own several cars but only drive one or two of them frequently, consider selling the other vehicles. Your car insurance premium is based on the number of cars on the policy, so the more you add, the higher your rate. 

If you have vehicles listed on your policy that you rarely drive, you’re wasting money every month on insurance that isn’t needed. Consider getting rid of these vehicles or turning in their plates and registration so you can legally take them off your auto insurance policy.

Review Your Current Coverage

When you shop around for auto insurance, you’ll find several different options. Be sure you’re aware of the mandatory coverages and limits you must have on your auto insurance policy according to state guidelines. In addition to these coverages, you may also add comprehensive and collision coverage, which covers repairs to your vehicle if you’re in an accident and it’s your fault.

Additional coverage may also include rental vehicle or towing and labor coverage. If you need to rent a car because your vehicle isn’t driveable after an accident, rental vehicle coverage reimburses you for some or all of the expenses. If your vehicle breaks down or is in an accident and needs to be towed, towing and labor coverage compensates you for this expense.

While these are all useful coverages, adding on these elective additions makes your policy premium higher. If you want to save money, consider dropping some of the coverages that aren’t mandatory. Before eliminating coverages from your policy, consult with an insurance agent and analyze your financial situation. Make sure you feel comfortable with less coverage for your vehicle or lower liability limits, which cover another party in an accident that’s your fault.

Common Car Insurance Discounts

Many car insurance providers offer premium discounts to policyholders who meet certain qualifications. The specific discounts offered vary by company, but may include the following:

  • Defensive driving: If you complete a defensive driving course and submit your certificate of completion, you may qualify for this discount.
  • Accident-free: If you haven’t been in an accident for a specific period of time (usually five or 10 years), your company may offer a discount.
  • Safe driver: If you haven’t had any driving citations, such as driving under the influence or speeding, your auto insurance rate is generally lower.
  • Low Mileage: Your car insurance provider may offer a discount if you don’t drive your car often. The mileage threshold may vary, but generally, if you drive less than 7,500 miles annually, you may qualify for this discount.

Car insurance is an investment you must make if you want to legally operate your vehicle in the state. As a low-income car owner, there are several ways you can save money while still purchasing a car insurance policy that provides vital coverage for you, your vehicle, and your family.