Unemployed Car Insurance: Can unemployment cause car insurance rates to be lowered?

Unemployed car insurance rates can be expensive. The national average for car insurance is $86/mo., but car insurance for unemployed people can cost 30% more. There are many factors that affect car insurance rates, however, and employment is only one of them. It's possible to get cheap car insurance while unemployed.

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Zaneta Wood, Ed.S. has over 15 years of experience in research and technical writing bringing a keen understanding of data analysis and information synthesis to reach a wide variety of audiences. She studied adult education and instructional technology at Appalachian State University as well as technical and professional communication at East Carolina University. Zaneta has prepared technical p...

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Joel Ohman is the CEO of a private equity backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He has an MBA from the University of South Florida. Jo...

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Reviewed by Joel Ohman
Founder & CFP®

UPDATED: Mar 18, 2021

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Here's what you need to know...

  • Unemployment may increase your car insurance rates
  • You can mitigate the rate increase by letting your insurance company know you no longer commute
  • Shopping around can help you to find lower insurance rates when unemployed

Although you’re no longer driving as much when you’re unemployed, you might be surprised to find out that doesn’t always mean lower insurance rates. Car insurance rates for unemployed individuals are often more expensive than average.

Even when unemployed, car insurance continues to be a must to get around on your job hunt as well as your daily life. It’s possible to get cheap car insurance while unemployed with a little effort.

Before you read more, compare unemployed car insurance rates for free right now. Enter your ZIP code above to get started.

Will my car insurance go up if I am unemployed?

Is car insurance cheaper if you don’t work, or will it go up? It depends. Unemployed car insurance can be cheaper or more expensive than average. If your job search takes you on the road more frequently, expect your car insurance rates to increase.

According to the National Institutes of Health, driving more could increase your chances of involvement in a severe accident. Car insurance companies agree with statistics and may see you as a higher risk if you drive more frequently.

Unemployed drivers tend to file more claims than those who’re employed.

That’s because unemployed individuals are searching for employment. During the job search, there may be a lot of roadways and conditions that you’re not used to navigating.

However, you can offset the 30 percent increase in car insurance with good credit, a clean driving record, and driving less. According to the Federal Trade Commission, companies offer lower rates to drivers with good credit because they present less risk.

Below you’ll find average annual rates based on credit, driving record, and commute mileage.

Annual Rates Based on Good Credit, Clean Driving Record & 6,000 Commute Mileage
CompanyGood CreditClean Record10 miles commute. 6,000 annual mileage
USAA$1,821$1,934$2,483
State Farm$2,174$2,821$3,176
Geico$2,435$2,146$3,163
American Family$2,692$2,694$3,401
Nationwide$2,926$2,746$3,437
Progressive$3,629$3,393$4,030
Farmers$3,677$3,461$4,179
Allstate$3,860$3,820$4,842
Travelers$4,059$3,448$4,400
Liberty Mutual$4,388$4,774$5,995
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Good credit and a clean driving record will earn you the cheapest car insurance rates. A longer commute mileage is more expensive, but good credit and a clean driving record can offset high prices.

USAA, State Farm, and Geico are the cheapest car insurance companies in the nation, while Allstate, Liberty Mutual, and Traveler tend to be more expensive.

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Should I contact my car insurance company if I lose my job?

You should always let your insurance company know of any change in your driving habits. The majority of people put fewer miles on their vehicles when they are unemployed because they are not driving back and forth to work daily, and that can mean a discount.

If you can show that you will indeed be driving less, your insurance company may lower your rates.

Also, a good driving record and an excellent financial standing with your car insurance company will help lower car insurance rates.

Being honest with your insurance company is the best policy. A representative can help you to find ways to lower your rates. If your current company can’t help you, it’s time to shop around.

Does retirement affect car insurance?

Bear in mind that the same rules don’t apply to being retired. Why does being retired affect car insurance? If you’re no longer working, your cars can be rated for pleasure use.

Car insurance companies look at retirement differently than they do being unemployed. There are a number of programs and discounts for people that are retired to help reduce rates.

What if I’m looking to purchase a new car insurance policy while unemployed?

Can I get car insurance without a job? It can be a bit harder to get an insurance policy if you are unemployed, but most companies will insure you. Many insurance companies see those who are unemployed as being more of a risk to insure.

Unemployment also raises the risk that you may not make monthly payments or cover the cost of your car insurance deductible.

Your best bet in this situation is to shop around. Get several quotes from different car insurance companies and compare the policies. While no specific companies specialize in insuring the unemployed, you will find that some are more understanding of your situation than others.

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What else can I do to lower my car insurance rates if I am unemployed?

There are many ways you can lower your insurance rates if you find yourself unemployed and in a situation where you need to lower your bills. Insurance companies provide several incentives and discounts that you can potentially use.

Bundling is one of the easiest ways to get a discount on car and home insurance and reduce two bills at once.

There are also more drastic measures you may need to take temporarily to afford insurance while in your current situation. The following are some of the ways you may be able to lower your rates.

  • You can reduce your coverage to liability-only coverage as opposed to full coverage car insurance
  • Consider reducing the number of cars in your household
  • If you cannot reduce the number of cars, you may be able to trade in your vehicle for one that costs less to insure. More conservative, less sporty, cars are usually less expensive when it comes to car insurance
  • Consider opting for a higher deductible
  • If you live in an area where public transportation is an option, consider lowering the number of miles you drive annually by taking public transportation more often

Finding a new car insurance policy while unemployed can be a challenge. If your current policy comes with a high car insurance rate, you may want to shop around and see what others will offer you.

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Is usage-based car insurance an option if you’re unemployed?

One of the ways to get a lower rate and prove your safe driving habits at the same time is to sign up for usage-based car insurance. Geico, Progressive, Allstate, and many other car insurance companies have usage-based car insurance. Auto insurance for unemployed people can be much cheaper with a usage-based program.

Usage-based car insurance may also be called pay-per-mile, pay-as-you-go, or pay-how-you-drive insurance.

Insurance companies use telemetrics devices or apps to measure how many miles you drive and your driving habits. After gathering information for a set period of time, a discount is calculated and applied to your policy.

While the car insurance company will still use the same factors to calculate your initial rate, a usage-based program can earn you a fairly big discount.

Pay-per-mile is the only usage-based system that differs, in that your rate is calculated using a base rate as well as a per-mile rate. You are charged the base rate and the total of the actual miles you drive each month. That can mean big savings if you aren’t driving much.

If you’re currently unemployed and looking for a new, less expensive car insurance policy, we can help. Compare unemployed car insurance rates from several companies by simply entering your ZIP code below.

Frequently Asked Questions: Unemployed Car Insurance

If you still have some questions, check below to see if we’ve got the answers you’re looking for.

#1- Which job is the cheapest for car insurance?

The top three jobs that carry the cheapest car insurance are Clerical Assistant, Local Government Officer, and Medical Secretary.

#2 – Can you get car insurance with no money down?

Yes. Expect your car insurance rates to cost more monthly. If you pay a deposit at the start of the car insurance policy, you can lower your monthly payments for the rest of the policy term.

#3 – Do insurance companies check occupation?

Insurance companies will ask you about your occupation, but they don’t have their own method of verifying. Although your occupation doesn’t necessarily determine car insurance rates, it gives the car insurance company insight into how much you may use your car. Car or van insurance for unemployed people can both be more expensive.

You may be asked to provide proof of your occupation if you’re asking for a specific discount based on your job.

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