Low-Income Car Insurance (How to Find Cheap Rates)

Low-income auto insurance is often more expensive than auto insurance for higher-income drivers. However, some states offer state-funded programs to help low-income drivers afford car insurance. Find cheap low-income car insurance quotes online right now!

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A former insurance producer, Laura understands that education is key when it comes to buying insurance. She has happily dedicated many hours to helping her clients understand how the insurance marketplace works so they can find the best car, home, and life insurance products for their needs.

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Written by Laura Berry
Former Insurance Agent Laura Berry

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® Joel Ohman

UPDATED: Jun 2, 2022

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Here's what you need to know...

  • Unfortunately, low-income individuals often pay more for car insurance coverage than people with higher incomes
  • Some states have addressed the unaffordability for some to purchase auto insurance by offering state-funded programs
  • If you don’t qualify for assistance, there are other ways you can get the required car insurance coverage for less

When you’re short on funds, the cost of auto insurance for low-income families can seem overwhelming. You may be wondering if there is a program for low-income individuals or families to help you afford your auto insurance premiums.

We’ll help you learn how to ease the burden of high-cost auto insurance. One step to finding cheaper coverage that everyone can explore is to compare car insurance quotes. You can get started right here on this page!

Below, we’ll examine the government-funded programs available and give you tips on how to save as much as possible so car insurance can fit in your budget.

Before we get started, enter your ZIP code above to compare hundreds of quotes all in one place!

Low-income Car Insurance

Low-income auto insurance is coverage for individuals who do not make a lot of money. Some states offer government-funded car insurance for individuals or families. Some car insurance companies advertise equality in pricing thereby helping low-income individuals find insurance for a fair price.

Traffic laws and car insurance in general have come a long way since the mid 1900s, which has greatly improved road safety, but it does come with a price tag. And unfortunately — more often than not — the people with the least amount of money end up paying the highest premiums.

Read on to learn WHY this happens.

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Low-income Drivers Pay More for Car Insurance

Unfortunately, as a 2018 Consumer Federation of America (CFA) study confirmed, lower-income people tend to pay more for identical coverage than higher-income individuals.

Income is not one of the variables insurance companies put into their algorithms to determine premiums. In fact, they’re not allowed to consider income because insurance rating factors have to be proven to be “actuarially validated predictors of risk,” according to the Insurance Information Institute (III).

So, if income isn’t a validated predictor of risk, why does it seem to make such a difference in car insurance rates?

Some people would argue that low-income individuals and families are discriminated against, even for basic, minimum coverage. And even when those individuals or families have clean driving records.

CFA’s Director of Insurance, Bob Hunter said, “When we look at the many ways in which lower- and moderate-income Americans are targeted with higher prices for the same product as their higher-income neighbors, we have to rethink the state enforced rules governing the pricing of state-mandated auto insurance.”

Affordable car insurance is a concern in most communities and households. But, for low-income households, affordable coverage at an affordable rate is a must have to meet monthly budget constraints.

Auto insurance companies and the insurance industry argue that they set rates fairly based on risk and while it’s unfortunate that increased risk tends to occur in low-income areas, that doesn’t necessitate discrimination.

In 2014, the Insurance Information Institute former president, Robert Hartwig, argued that insurance tends to cost more in urban areas because of higher rates of theft and accidents and higher repair costs.

There are many things to consider with this there…

How Low-income Families and Individuals Are Affected by Higher Rates

We’ve collected the average annual cost for full coverage and contrasted that with the annual median income for every state to first look at how each state fairs against each other:

StateAnnual Full Coverage
Average Premiums
Annual Per Capita
Disposable Personal Income
% of Income
National Total$981.77$40,859.002.40%
New Hampshire$795.50$48,280.001.65%
New Jersey$1,379.20$49,983.002.76%
New Mexico$920.42$33,358.002.76%
New York$1,327.82$47,446.002.80%
North Carolina$768.28$35,099.002.19%
North Dakota$768.09$51,311.001.50%
Rhode Island$1,257.40$42,585.002.95%
South Carolina$936.69$33,295.002.81%
South Dakota$744.28$41,825.001.78%
West Virginia$1,032.45$32,277.003.20%
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Second, we wanted to dig into how different ethnicities are affected by poverty, so we examined how major ethnicities in American fair against the average poverty level in each state:

Native Hawaiian
Pacific Islander
American Indian
Alaska Native
Multiple RacesTotal
United States8%20%16%9%22%13%11%
District of Columbia3%23%11%10%N/AN/A14%
New Hampshire5%N/AN/AN/AN/AN/A5%
New Jersey4%15%14%6%N/A8%8%
New Mexico10%23%20%N/A30%17%17%
New York7%19%18%13%24%14%12%
North Carolina8%19%22%12%22%18%12%
North Dakota6%N/AN/AN/A28%19%8%
Rhode Island6%21%22%13%N/A13%10%
South Carolina8%22%22%12%20%20%13%
South Dakota7%N/AN/AN/A44%N/A10%
West Virginia16%28%22%N/A48%25%17%
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Third, we researched the average income of different ethnicities in America and again looked at what percentage of their income went towards car insurance (full coverage):

Bar charts of median household income by ethnicity and the percent of income spent on car insurance

Last, we wondered what the percentage of income would look like for individuals and families at the Federal Poverty Line (FPL):

bar chart of percent of income for federal poverty line (FPL)

What’s interesting is comparing the percentage of income for ethnicities under the FPL then looking at what percentage of those households are under the FPL. That paints a much bleaker picture for minorities in urban areas trying to find cheap car insurance.

Although the average rate setting may not be directly discriminatory, other historical factors like redlining, discriminatory housing practices, and lending practices which indirectly affect where minorities live and their income must be factored into the discussion.

We’re not through yet…

The History of Rate Setting

On the surface, it seems you could make a strong argument for driving history being the only factor for determining rates. Surprisingly, though, the average person has so few negative marks on their driving history, there’s just not enough data to use that factor alone to predict risk.

The Insurance Association of Connecticut conducted a study which how few claims the average policyholder makes:

  • One bodily injury claim every 77 years
  • One property damage liability claim every 24 years
  • One comprehensive claim every 13 years
  • One collision claim every 15 years

If Connecticut is indicative of how the rest of the country makes claims, it’s easy to agree there isn’t enough information to base rates on history alone.

The National Association of Insurance Commissioners (NAIC) lists the main factors that the factors that are considered in the formulation of rates as follows:

  • Location
  • Age
  • Gender
  • Marital status
  • Driving experience
  • Driving record
  • Claims history
  • Credit history
  • Previous insurance coverage
  • Vehicle type
  • Vehicle use
  • Miles driven
  • Coverages and deductibles

At the top of this list is “location.” Since urban areas see an increased risk of accidents, theft, and vandalism, insurance rates are higher. Since low-income people tend to live in urban areas, they tend to pay higher rates.

The table below demonstrates that a higher percentage of people living within higher-income ZIP codes can purchase car insurance for less than $500 annually than those living in lower income ZIP codes.

Average Income within Zip CodePercentage of people who pay less than $500Percentage of people who pay between $500 and $749Percentage of people who pay over $750
Less than $41,51564.9%25.0%2.5%
Between $41,516 and $104,62473.7%23.1%0.1%
Over $104,62573.6%26.3%0.6%
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ZIP codes are usually how locations, or territories, are separated for making insurance rates. There are instances where inhabitants of one house would pay hundreds of dollars more annually for coverage than identical inhabitants of another house across the street in another ZIP code.

While this seems absurd, as long as location is a factor in rate formulation, no matter how territories are divided, situations like this will occur around territorial lines.

Your ZIP code is one of the biggest variables that make up your insurance rate and is the main reason why low-income individuals see higher rates.

Unfortunately, there are even more factors the automobile insurance industry considers that stack the odds against those with less money. Some companies in some states factor in the following information:

  • Occupation
  • Education

People with lower education are charged higher premiums while tending to make less money than those with higher education. See below for a break of education level by gender and ethnicity and the percentage of income they pay towards car insurance:

Education levelCountrywide Full Coverage
Annual Average
Men Annual Income% of IncomeWomen Annual Income% of IncomeWhite Annual Income% of IncomeBlack Annual Income% of Income IncomeAsian Annual Income% of Income IncomeHispanic Annual Income% of Income
Total, all education levels$981.77$47,9442.05%$39,1042.51%$44,9282.19%$35,0482.80%$51,5321.91%$32,1883.05%
Less than a high school diploma$981.77$26,8843.65%$21,2684.62%$25,6363.83%$22,8804.29%$24,8043.96%$24,2324.05%
High school graduates, no college$981.77$39,0522.51%$30,0563.27%$36,1922.71%$30,1083.26%$31,4083.13%$30,9403.17%
Some college or associate degree$981.77$45,3442.17%$34,3722.86%$41,1322.39%$33,1242.96%$38,8962.52%$35,8282.74%
Bachelor's degree only$981.77$64,9481.51%$50,1801.96%$58,8641.67%$46,5402.11%$59,7481.64%$48,7242.01%
Bachelor's degree and higher$981.77$72,0201.36%$54,5481.80%$63,3881.55%$50,4401.95%$69,0561.42%$52,3641.87%
Advanced degree$981.77$84,7601.16%$61,6201.59%$72,2801.36%$59,7481.64%$81,2241.21%$64,2201.53%
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Also, people in entry-level jobs tend to pay higher premiums while, once again, making less money.

When insurance rates are so high that families are forced to decide between basic necessities and insurance, often, they’ll decide to take the risk of driving uninsured.

1Florida26.7%18Illinois13.7%35New Hampshire9.9%
3New Mexico20.8%20Louisiana13.0%37South Carolina9.4%
8Indiana16.7%25Georgia12.0%42South Dakota7.7%
11Alaska15.4%28Delaware11.4%45North Dakota6.8%
13Rhode Island15.2%30Hawaii10.6%47Vermont6.8%
14New Jersey14.9%31Oklahoma10.5%48North Carolina6.5%
15Wisconsin14.3%32West Virginia10.1%49Massachusetts6.2%
16Texas14.1%33Montana9.9%50New York6.1%
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Driving uninsured is very risky and it is illegal. Something’s got to give, though. You have to drive to make money, but driving is using up a large portion of that money you make. It ends up becoming a vicious circle.

Having adequate insurance is what everyone should have. Driving uninsured is what no one should do.

When being able to afford adequate insurance is not possible, the middle ground would be an improvement over the alternative driving without insurance.

Where can this middle ground be found? Unfortunately, there is no universal income-based car insurance program across the country, but keep reading and we’ll show you some government car insurance programs that could help, depending on which state you live in.

Where can you find a list of low-income programs and companies, you may be asking….

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Government-sponsored Car Insurance for Low Income Families and Individuals

Some states have addressed the need for insurance for low-income individuals and families.

#1 – California’s Low-cost Automobile Insurance Program (CLCA)

California’s Low-cost Automobile Insurance Program (CLCA) is available for those who qualify in that state.


  • Have a valid California drivers’ license
  • Meet income eligibility guidelines
  • Own a vehicle valued at $25,000 or less
  • Be at least 16 years of age

This program is available regardless of immigration status as long as you have a driver’s license. A California driver’s license can be obtained even without proof of legal presence in the United States through Assembly Bill (AB) 60.

The income eligibility varies with the size of the household and equates to 250 percent or less of the federal poverty level.

Household Size (number of people)Maximum Yearly Income to Qualify
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The basic coverage you can receive through CLCA is as follows:

  • Up to $10,000 per person in case of bodily injury or death
  • Up to $20,000 per accident in case of bodily injury or death
  • Up to $3,000 for property damage

You also have the option to include the following types of insurance to your policy:

  • Uninsured motorist bodily injury coverage
    • Up to $10,000 per person (you or your passengers injured)
    • Up to $20,000 per accident
  • Medical payments – $1,000 per person injured

There is no option for first-party coverage through California’s low-income government auto insurance, however, you can purchase comprehensive and/or collision coverage directly through the agent who helps you get CLCA basic insurance.

The cost for this program is $556 a year or less. Depending on which county you live in, there is a base rate. If you have three years of clean driving experience or more, you’ll pay only the base rate. If you fall into one of the following risk categories, you’ll pay a surcharge percentage of the base rate:

  • 30 percent surcharge if the driver is a single male 19–24 years old.
  • 40 percent surcharge if the driver has less than three years of verifiable driving history.
  • 100 percent surcharge if the policy owner or operator is 16–18 years old

#2 – New Jersey Special Automobile Insurance Policy (SAIP)

New Jersey’s state-funded auto insurance program is sometimes called “Dollar-a-Day” car insurance because the annual rate is $365.

To be eligible, you must be enrolled in federal Medicaid with hospitalization. Other Medicaid programs do not qualify.

Since most insurance providers can offer this program, the provider can check your Medicaid enrollment number to see if you qualify.

This coverage provides no liability coverage and participants are actually considered uninsured, but it’s better than having no insurance at all because it provides the following benefits:

  • Emergency treatment immediately following an accident and treatment of serious brain and spinal cord injuries up to $250,000
  • A $10,000 death benefit.

Basic Policy

Anyone purchasing car insurance in New Jersey is eligible for the Basic Policy. The Standard Policy was the minimum requirement to drive legally before The Automobile Insurance Cost Reduction Act of 1998 mandated that a Basic Policy be available to all drivers.

With a Basic Policy in New Jersey, you can purchase lower limits than you can in a Standard Policy. The coverage a basic policy provides is as follows:

  • Bodily Injury Liability – Not included, option of adding $10,000
  • Property Damage Liability – $5,000
  • Personal Injury Protection – $15,000 per person per accident, $250,000 for certain injuries

With both a SAIP and Basic policy in New Jersey, you’re covered legally and won’t be ticketed for driving without insurance, but you won’t be protected by adequate liability insurance. If you have a job or any assets, you could be forced to pay out-of-pocket for damage you cause.

#3 – Hawaii’s Aid to the Aged, Blind, and Disabled Program (AABD)

Hawaii offers free car insurance for low-income individuals who meet certain criteria.

According to Hawaii’s Department of Health and Human Services, “If you receive SSI benefits or financial assistance, you may qualify for free no-fault insurance, please check with the eligibility worker.”

One group that may be eligible for free auto insurance are those who receive assistance through the Aid to Aged, Blind, and Disabled program (AABD).

To qualify, you must meet these requirements:

  • 65 years old or older or meet the Social Security Administration’s definition of disabled or blind
  • Usually not eligible for Social Security Benefits
  • Have a countable income below 34 percent of the federal poverty level
  • Have resources less than $2000 for an individual and $3000 for a couple

Non-government Programs for Low-income Families and Individuals

Citizens United Reciprocal Exchange (CURE)

This non-profit insurer states that they “believe that everyone deserves auto insurance at a fair rate that is based primarily on their driving record.” They don’t consider education, occupation, and home ownership in their rates.

It is available in New Jersey and Pennsylvania.

Maybe you don’t live in a state that offers a special program for low-income families. There are still ways to find car insurance for less than you may expect. Keep reading to learn how!

Four Tips for Finding Low-cost Auto Insurance

If you don’t qualify for any of the programs above, don’t despair. Follow these tips to find the insurance you need for the lowest price possible!

#1 – Compare Quotes

Using a quote comparison tool like the one on this page will let you see the rates of several companies after you input the required information just once.

You can also go to insurers’ websites and request a quote from each individually.

When you compare quotes, you may be surprised by the savings you can find by switching to a different company.

#2 – Look for Discounts

Below, we have compiled a list of common discounts available from popular car insurance providers. Browse the list to see if there are discounts you might not have realized you’re eligible for.

Types of Car Insurance Discounts Available
Vehicle DiscountsDriver/Customer DiscountsPersonal Discounts
Active Disabling DeviceClaim FreeEmergency Deployment
Adaptive Cruise ControlContinuous CoverageFamily Legacy
Adaptive HeadlightsDefensive DriverFamily Plan
Anti-lock BrakesDriver's EducationFederal Employee
Audible AlarmDriving Device/AppFurther Education
Automatic BrakingEarly SigningGood Student
Blind Spot WarningFull PaymentHomeowner
Daytime Running LightsGood CreditLife Insurance
Economy VehicleLoyaltyMarried
Electronic Stability ControlMultiple PoliciesMembership/Group
Farm/Ranch VehicleMultiple VehiclesMilitary
Forward Collision WarningNew Customer/New PlanNew Address
Garaging/StoringOccasional OperatorNew Graduate
Green/Hybrid VehicleOnline ShopperNon-smoker/Non-drinker
Lane Departure WarningOn-Time PaymentsOccupation
Newer VehiclePaperless/Auto BillingRecent Retirees
Passive RestraintPaperless DocumentsStable Residence
Utility VehicleRoadside AssistanceStudent Away
Vehicle RecoverySafe DriverStudent or Alumni
VIN EtchingSeat Belt UseVolunteer
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#3 – Evaluate Your Coverage

If you need to get your price down and you’re driving an older car that is paid for in full, consider purchasing only the basic coverage required in your state.

#4 – Raise Your Deductible

If you decide to purchase full coverage rather than basic coverage, you’ll pay more money. You’ll have a deductible amount with comprehensive and collision coverages, and if you raise your deductible, your monthly premium will lower.

Not only is car insurance required, but it’s also something that truly protects your finances. If you can’t afford coverage and you live in a state where you qualify for a special program, going with that state-funded insurance will be better than not having any protection at all.

If you don’t qualify for any special programs or government-funded car insurance, you’ll have to take steps on your own to get coverage that is as affordable as possible.

Get started right here by comparing quotes. Enter your ZIP code below.

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