How to Get Low-Income Car Insurance and Save

California, New Jersey, Hawaii, and Maryland offer government low income car insurance programs. If you live in one of these states, your program costs less than $400 per year and may be free. If you don't live in one of these states, skip to the next section.

Government low-income car insurance programs offer financial relief, but have limitations. All programs provide only basic coverage that may not protect you from serious accidents. Unlike private insurance, you can't shop for the cheapest rates. Most programs require annual eligibility verification, so you must prove your income each year to keep coverage.

If you don't live in California, New Jersey, Hawaii, or Maryland, you can find affordable coverage even on a low income.  Car insurance don't price your coverage based on your income but on your risk level. Low income car insurance rates start as low as $18 per month for minimum coverage and increase as you add more liability coverage and full coverage that protects your car.

Insurance companies charge different prices for identical coverage. This makes comparison shopping one of the best strategies for getting car insurance with a low income. 

Get quotes from at least three companies and more if you want to be sure you are getting the lowest price. Include GEICO and Kemper, which are two of the cheapest nationally. Spending 30 minutes on quotes saves you hundreds of dollars per year.

Where you live with impact the affordability of your car insurance. Prices are different in each state.  
GEICO has the cheapest liability car insurance in 15 states for low-income drivers. Erie Insurance ranks cheapest in five states and Farm Bureau is the lowest in four states. For drivers who want additional financial protection and can afford more, full coverage rates show GEICO is the most affordable in 10 states, followed by Erie and Auto-Owners.

*NOTE: These low income car insurance rates are based on a 40-year-old driver with good credit and no driving violations. USAA was not included in the rankings because it only caters to military families. For eligible customers, it may be a more affordable option.

It's challenging to afford car insurance on a low income, but it's more important to get some coverage than to drive without insurance. State minimum liability coverage is the cheapest option if you are on a low income. 

You will only get coverage for damage to your own car if you buy “full coverage" that costs about  two times more than minimum liability and is less affordable on a low income. If you own your car and it's worth less than $5,000, minimum liability is all you need. If your car is financed or leased, your lender requires full coverage.

Low income drivers will reduce their car insurance cost by having a higher deductible. Your deductible is how much you pay out of pocket before insurance kicks in. Raising it from $500 to $1,000 lowers your monthly car insurance by 10 to 30 percent. Only do this if you can set aside $1,000 in savings if you need it for an at-fault accident.

Low income drivers can reduce car insurance costs by driving less. When you buy insurance, the company asks how many miles you drive per year. Be honest about your actual mileage. If you work from home, carpool, or use public transportation, your mileage is likely lower than average. Lower mileage means lower risk, so your rate will be more affordable to meet your budget.

Insurance companies offer discounts, but not specifically for low income car insurance. Ask about any you might qualify for before you buy. Common discounts include good driver discounts if you have a clean record and automatic payment discounts. Ask what applies to you. You may save 5 to 15 percent with one or two discounts.

Credit history is one of the biggest factors in your rate and make it harder for low income drivers to get affordable car insurance rates. You can't fix credit overnight, but here's what works: Pay all bills on time, keep credit card balances below 30% of your limit, and check your credit report for errors. As your score improves over time, your car insurance rate drops.  Note: California, Hawaii, Massachusetts, and Michigan don't allow insurers to use credit scores.

What if insurers reject you?  Low income drives can often have a lower credit score and be rejected by major insurers. In this case, every state offers an assigned risk pool through the Automobile Insurance Plan Service Office (AIPSO). This program helps drivers who can't get coverage in the standard market get insured. Rates are higher than the market average, but it's a way to get covered after being rejected.

If you drive under 400 miles per month, pay-per-mile insurance saves you 20 to 40 percent compared to standard insurance making it more affordable for low income drivers. You pay a small monthly fee plus a charge for each mile you actually drive. 

Nationwide SmartMiles (40 states) and Metromile (8 states) are your best options. Nationwide charges about $0.05 to $0.12 per mile with a 250-mile daily cap and safe driving discounts up to 10 percent. Metromile charges $0.08 to $0.14 per mile.

We answer common questions to help low-income drivers find the most affordable car insurance provider and the best deal.

We analyzed 83,056 quotes from 46 insurance providers across 473 ZIP codes using data from state insurance departments and Quadrant Information Services. Our sample reflects real-world pricing in communities where low-income drivers live, not just affluent areas.

We collected quotes for two coverage levels: minimum coverage (meets state requirements) and full coverage (100/300/100 liability plus comprehensive and collision with a $1,000 deductible). We focused on insurers offering consistent affordability across states, not temporary promotions that disappear at renewal.

Beyond traditional insurance, we researched government assistance programs in California, Hawaii, New Jersey and Maryland..