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Key Takeaways


Low-income drivers pay more for car insurance than their higher-income peers.


There are a few state-funded programs to help low-income drivers.


If you don’t qualify for a state-funded program, you can still find cheap car insurance.

Car insurance is a requirement in every U.S. state, except New Hampshire. If you’re on a tight budget, it’s important to find cheap, low-income car insurance. The easiest way to save money on car insurance is to shop around and compare quotes. Insurance rates vary widely from company to company, and just a simple internet search can often save hundreds of dollars on car insurance. Even if you already have car insurance, get some quotes from other companies. It may save you money.

Cheapest Car Insurance Companies for Low-Income Drivers

Technically, your income isn’t a factor in how much car insurance companies charge. However, they do consider things like where you live and your education level. These factors tend to correlate with income. Though, the amount of coverage you buy will also affect your premiums. Every state has required minimums for liability car insurance, except New Hampshire. Some states also require personal injury protection (PIP) and uninsured or underinsured motorist coverage (UIM).

Collision and comprehensive insurance, often referred to as full coverage car insurance, covers damage to your car. Collision covers damage to your vehicle in an accident if you are at fault. Comprehensive covers damage to your vehicle resulting from weather, hitting an animal, vandalism or theft. If you have a car loan, your finance company will require this insurance. However, if your vehicle is only worth a few thousand dollars, full coverage probably isn’t worth the cost.

Liability insurance is a requirement in almost every state, so you’ll need at least this minimum amount of coverage. You could also raise the deductible to save some money, but you should have access to the amount of the deductible in case you get into an accident.

MoneyGeek did some research and found that these companies are the top three insurers for low-income drivers.


If you currently serve in the armed forces, are a veteran or a family member of a service member, it’s hard to beat USAA. Premiums are among the lowest in the industry, and customer service is top-notch. USAA provides personalized financial advice as well. The biggest drawback is that non-military members are not eligible.


GEICO offers some of the cheapest car insurance rates in almost every state, even for drivers with poor credit. In addition to the already low-rates, the company has a number of discounts available. You can get a quote online that will explain everything the coverage provides.

State Farm

State Farm has a ton of discounts available, and it is also a good company to look at if you’ve gotten a ticket or had an accident. Accident forgiveness is available at no cost, which many insurance companies charge for this benefit. With more than 19,000 agents nationwide, it’s easy to find one near you.

How Much Does Car Insurance Cost for Drivers With a Low Income?

It’s a sad fact that lower-income drivers tend to pay more for the same amount of coverage than those with a higher income. Where you live is a large part of this, as zip codes are among the many reasons for higher rates. Car insurance companies claim that people living in certain zip codes are less likely to file a claim, so they charge them less.

Low-income drivers also pay a higher percentage of their income for their car insurance. As the chart below illustrates, the less money you make, the greater percentage of your income goes towards your car insurance bill.

For example, if you have an average annual premium with GEICO and you have a yearly income around the Federal Poverty Line of $12,760, your average annual premium would be 8.2% of your annual income. This can really strain your budget, but don’t cancel car insurance, thinking you’ll pick it up again when you can afford it. This will result in higher premiums.

Annual Income Compared To Car Insurance Average Premiums
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Insurance companies differ in how they categorize different neighborhoods and weigh different factors, so it’s still important to shop around to get the best car insurance for you if you have a low income.

What Level of Coverage Do I Need If I Have a Low Income?

Your state’s minimum required amount of liability insurance is the least expensive option. Adding collision and comprehensive insurance will be more expensive. You don’t have to have it unless you have a loan on the car. After that, some experts recommend dropping collision and comprehensive when the premiums cost more than 10% of the payout. So, for example, if you own a car worth $5,000 and you have a deductible of $1,000, if your premiums are higher than $400, you should consider dropping collision and comprehensive.

Every state has a minimum amount of liability insurance it requires. If you’re in an at-fault accident, these limits can quickly exceed your coverage amount. A slight bump up to the next level of liability insurance can be less than $200 a year and may be worth it if you can afford it.

Average Annual Premium by Insurance Coverage Level
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Factors That Impact Your Car Insurance Rates

Your income isn’t a factor in determining your car insurance rates. However, car insurance companies do consider a lot of factors that tend to correlate with income, such as where you live and your level of education.

What type of car you drive will impact your insurance rates. High performance, flashy sports cars are always more to insure, as drivers of these cars tend to take more risks.

One reason people with higher incomes tend to get better rates is that they can afford to pay for damages out-of-pocket, so they don’t have to file a claim for every accident: fewer claims equals lower premiums.

Low-income drivers sometimes have gaps or lapses in their insurance coverage, and they can lead to higher rates. Insurance companies consider people with gaps in coverage as high-risk because they think you were still driving even though you had no insurance during these times.

Other factors insurance companies consider:

  • Vehicle
  • State and ZIP code
  • Age
  • Gender
  • Marital status
  • Driving history
  • Previous insurance coverage
  • Claims history
  • Credit score (except in California, Massachusetts and Hawaii)
  • Average mileage
  • Coverage type and deductibles

Does Your Credit Score Impact Your Car Insurance Cost?

Some insurance companies consider credit score when determining rates. The reasoning is that drivers with low credit scores are more likely to file claims. However, some states have decided this is discriminatory. If you live in California, Massachusetts or Hawaii, insurance companies can’t consider your credit score as a determining factor. If you live in any other state, your credit score will affect your premiums. You can still find cheap car insurance if you have poor credit and need insurance.

In the table below, credit scores are defined as:

  • Good credit: 769-794
  • Fair: 710-740
  • Poor: 524-577

The average credit score is 703, according to Experian.

Average Annual Car Insurance Premiums by Credit Score
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How to Lower Your Car Insurance Premium for Low-Income Drivers

Finding cheap car insurance for low-income drivers may seem a herculean task, but there are many ways you can save money. The easiest way to save money is to shop around. This is also likely to result in the most significant savings, so don’t skip this step.

Here are some other ways to save:

Pay in Full

If you’re a low-income driver, paying for your auto insurance policy in one lump sum payment may not be realistic. However, if it’s possible, paying in full saves you somewhere between 5% and 15% a year.

Look for Discounts

The average car insurance company offers multiple discounts. Some discounts, such as good driver discounts, can save you as much as 30%. Other discounts save less, but they can still make a difference, and there’s a wide variety of them.

Take a Defensive Driving Course

Taking a class in defensive driving techniques can save you some money. It’s best to check with your insurance company before you sign up, as some companies have a pre-approved list of such courses. However, even if you don’t get a discount, you can learn skills that make you a better driver, and that will ultimately reduce your premiums.

Clear Your Driving Record

It may seem obvious, but good drivers pay less for car insurance. The cost of a ticket can increase your premium by hundreds of dollars a year. If you’re already having trouble paying your car insurance bill, you need to be careful while driving. Pay attention to the road: distracted driving kills eight people every day and injures over a thousand. Plus, one citation for texting and driving can raise your premiums.

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Shop around with websites that do all the comparison work for you. Or use the compare quote box below.

Insurance Rates

Compare Auto Insurance Rates

Ensure you are getting the best rate for your car insurance. Compare quotes from the top insurance companies.

Consider the Type of Car You Drive

Some cars are less expensive to insure than others. Luxury vehicles are expensive to repair and cost more to insure. High-performance sports cars are always more expensive to insure because insurance companies associate them with riskier driving. Cars such as the Subaru Outback or Ford Escape are among the cheapest vehicles to insure, according to Car and Driver.

Improve Your Credit Score

Unless you live in a state that doesn’t consider credit score (California, Massachusetts and Hawaii), raising your credit score will save you money on car insurance. Set a budget and stick to it. It is easier to buy your coffee from Starbucks, but it’s less expensive to make it at home. Little things add up.

Evaluate Your Level of Coverage

You will need to get at least your state’s minimum required amount of liability insurance. However, these requirements are very low, so if you can afford it, going to the next level of liability insurance is worth it. If your car isn’t worth more than a few thousand dollars, you probably don’t need full coverage. You can also drop roadside assistance and rental car insurance to save money.

Switch to Usage-Based Coverage

If you’re a good driver, consider getting a usage-based auto policy. The way it works is your insurance company uses a telematics device, plug-in device or app to track exactly what you do behind the wheel. It monitors things like rapid changes in speed, hard braking and how fast you drive. Keep in mind that these could result in higher premiums if the schematics reveal you take risks while driving.

Similarly, if you don’t drive much, some companies have low-mileage plans, where you pay for every mile that you drive.

These aren’t available in every state, so check with your insurance company to see what they offer.

Discount Options for Drivers With Low Income

Pay-In-Full Discount

If you can pay in full, you can usually save between 5% and 15% a year, depending on the company. You can also get a discount for going paperless or enrolling in auto-pay.

Job-Related Discounts

If you work as a teacher, physician or police officer, you may be eligible for a discount — statistically, these occupations are less likely to file claims. First responders, engineers, government employees and members of the armed forces can also earn discounts.

Safe-Driver Discounts

The easiest way to save money on your car insurance is to qualify as a safe driver. People with poor driving records pay more in insurance. If you haven’t had an accident or gotten a ticket in the last three years, you probably qualify as a good driver. You’re the type of customer insurance companies want to insure, so shop around to get a good rate.

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If you’re offered the opportunity to go to traffic school to get a ticket dismissed, you might want to take it. You’ll save hundreds of dollars over the next few years if you can keep the violation off of your record.

Good Student Discounts

Students with at least a B average, or 3.0 GPA, can qualify for a good student discount. You’ll need to provide a transcript, or a report card, to prove you’re eligible every year. These can save you between 10 to 15%.

Bundling Discounts

Having your auto insurance and your homeowners insurance — or renters insurance — with the same company will earn you a discount on both policies.

Vehicle Option Discounts

If your vehicle has added safety equipment, such as an anti-theft car alarm, anti-lock brakes or Lojack, you may be eligible for a discount. Driving an electric or a hybrid car often earns a discount as well. These tend to be minimal, but every little bit helps.

State-Funded Car Insurance Programs

California, New Jersey and Hawaii have government-sponsored programs to help low-income drivers afford insurance. If you live in one of these states, they’re worth looking into.

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

Good drivers who are within 250% of the federal poverty limit may qualify for this program. It provides liability insurance for a vehicle’s primary driver and eligible secondary drivers. To qualify, you must:

  • have a valid CA driver’s license
  • have a good driving record
  • meet income eligibility requirements
  • be at least 16
  • own a car valued at less than $25,000

Coverage limits are 10/20/3. It is lower than typical California liability limits, but certainly better than driving without any insurance.

New Jersey’s Special Automobile Insurance Policy (SAIP)

New Jersey has a program that provides medical coverage for low-income drivers. You must be enrolled in federal Medicaid with hospitalization to qualify. It covers emergency medical treatment after a car crash, up to $250,000. It also provides a $10,000 death benefit if that accident results in a death. It does not provide liability insurance, nor does it cover you for doctor’s visits beyond the initial treatment.

Hawaii’s Aid To the Aged, Blind, and Disabled Program (AABD)

If you get financial assistance from the state’s Assistance to the Aged, Blind and Disabled (AABD) program, you might be able to get car insurance through it as well. To qualify, you must meet one of the following requirements:

  • Be 65 or older
  • Legally blind
  • Totally and permanently disabled
  • Living with or providing care to someone who receives AABD assistance
  • Have an income below 34% of the current Federal Poverty Level

If you qualify, auto insurance is free.

Other Options for Low-Income Drivers

There are also a few non-state programs to help low-income drivers obtain cheap car insurance.

Citizens United Reciprocal Exchange

Citizens United Reciprocal Exchange is a not-for-profit insurance company. It is available through two subsidiaries: CURE auto insurance and NJ PURE for medical malpractice insurance.

If you live in New Jersey or Pennsylvania and you have a good driving record, CURE Auto insurance may work for you. CURE only considers your driving history when preparing a quote — not your credit score, your zip code, your education or anything else. This makes them a perfect option if you have a good driving history and not-so-perfect credit.

Insurance Rates

Compare Auto Insurance Rates

Ensure you are getting the best rate for your car insurance. Compare quotes from the top insurance companies.

About the Author

Gail Kellner is a freelance writer who specializes in personal finance and insurance. She loves to help people make the best financial decisions they can. When she's not writing about financial matters, she writes children's fiction and her first book will be coming out sometime soon (or so her publisher says). She has two delightful children on the autism spectrum and a husband who says he is not on the spectrum.

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