Low Income Car Insurance

On a tight budget? We've got you covered.

What is low-income car insurance?

Car insurance is one of the necessary evils of this world. It's not particularly exciting to talk about, it's expensive, and you have to have it. And yet, our data shows that the people who earn between $10,000 - $19,000 per year pay nearly as much as those who earn more than $200,000 per year. So, based on its necessity and the expense, it's not hard to understand why people are looking for car insurance on a low income. This is where it gets tricky.

Policies built specifically for low-income families are a bit of a gray area for insurance companies because your income isn’t technically a factor for your rate. However, insurance companies do use your credit score, education level, homeowners status, insurance history, and zip code (among other things) to determine your insurance rate — all of which can correlate with your income level. Let's look at each of these rate factoring a little further.

In this article, we will discuss:

  1. What impacts your premium that is related to income?
  2. How to find cheap car insurance
  3. Are there any government options?
  4. What about non-government programs?
  5. Additional resources

What impacts your premium

There are a few things that insurance companies use when developing your rate that is indirectly tied to your income; your credit score, education level, insurance history, homeowner status, and your zip code. Let’s break that down.

Your Credit Score

While some states consider the use of a credit score to determine your insurance rate discriminatory, it’s still a pretty common practice. This is because of data from The Federal Trade Commission shows that drivers with low credit scores are more likely to file a claim than drivers with high credit scores. Moreover, when they do file a claim it tends to be more expensive. As you can see with the data below, drivers with poor credit pay $106 more per month for car insurance.

Credit LevelPremium
Below Fair$1,934

These findings are reflected in our own State of Insurance report. While there are many circumstances surrounding your credit score, raising your credit score can save you around 17% on your auto insurance.

Your Education

Statistically speaking, the more education you have received, the more likely your insurance rate is going to decrease. Nationally, you can expect to save $36 per year if you have a PhD versus not completing high school.

Education LevelPremium
High School$1,342

Your Insurance History

This is a major rating factor for two reasons. One, car insurance companies see drivers who are licensed but have no insurance history as a major risk to insure. In their eyes, they were driving uninsured. Second, car insurance companies see a correlation between having low liability limits and high probability for filing a claim. As you can see with the data below, the difference between no insurance history and having 5 years of high levels of coverage is $186 annually.

Insurance HistoryAvg Annual Premium
No Insurance$1,460
1 Year with 50-100 BI Limit$1,356
3 Years with 50-100 BI Limit$1,323
1 Year with 100-300 BI Limit$1,317
5 Years with 50-100 BI Limit$1,311
3 Years with 100-300 BI Limit$1,287
5 Years with 100-300 BI Limit$1,276

Your location

Your insurance rate is specific to your zip code. Insurance companies use a variety of factors such as the number of claims in an area, road conditions, and population size to help determine rates in your zip code. As your insurance company assumes a portion of financial responsibility, living in an area with a high rate of stolen vehicles or property damage claims can be seen as a risky investment to an insurance company.

What all this means and what you can do

Insurance companies can’t legally ask your income to determine your rate, but they are able to use other metrics that are often (but not always) correlated to your income level. There is not a golden rule that people with lower incomes have worse driving records than those who occupy a higher tax bracket. Car insurance data suggests that people with higher incomes file fewer claims, but that could be because they simply are able to pay for damages out of pocket rather than filing a claim. Because a lot of these mentioned topics are not always in your control, let’s look at some ways you can still save on car insurance.

Shop around

There are a lot of variation in your car insurance rates based on your provider. Because of this, the very best way to ensure you're getting the best quote for car insurance is to shop around every 6-months. Only with The Zebra can you compare hundreds of local and national insurance companies. Enter your zip code below to see how much you could be saving.

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Pay for claims out of pocket

You should really only use your car insurance if the value of damage exceeds your reasonable ability to pay for it. Unless you have some sort of accident forgiveness in your car insurance policy, your company will raise your rate for 3-5 years after an accident. Broken down below, you can see how much this would impact your rate.

Year After AccidentAverage Annual Premium
0 - No Accident$1,427
1 Year Later$2,114
2 Years Later$2,801
3 Years Later$3,488

Over 3 years, this claim actually cost the insured over $2,000 - and this doesn't include the deductible. If you're unsure of whether or not to file a claim, consider our suggestions below.

  • Get an estimate for the repairs
  • Use our State of Insurance Analysis to see how much an at-fault accident raised rates in your state, consider that value over 3 years.
  • Compare the value of the out of pocket repairs to the rate increase over 3 years plus your deductible. If it is cheaper to file a claim, do that.

Consider usage-based insurance companies

Usage-based car insurance policies are designed to create your premium based on how you drive rather than who you are. In theory, if you're a safe driver, you can save. Below are some estimate from popular insurance companies. If you're interested in learning more, see our guide here.

CompanyEstimated Savings
Progressive's SnapShotAverage of $130
Allstate's DrivewiseAverage of 10-25%
State Farm's Drive Safe & SaveUp to 15%
Esurance's DriveSenseVaries
Nationwide's SmartRideUp to 40%
Liberty Mutual's RightTrackAverage of 5-30%

In addition to the companies mentioned above, consider Root and Metromile. While not available in every state, these companies might be able to offer you some savings.

Double check for discounts

Although some of the following discounts are automatically added, you will still want to comb through your insurance policy to ensure you’re getting every last discount.


This discount refers to having two types of insurance policies under one insurance company. Common policies are home/auto or renters/auto. The discounts affect both your policies, typically.

Homeowner StatusCar Insurance Premium
Renter w/ Multi-Policy$1,250
Home w/ Multi-Policy$1,181

Defensive Driver Discount

If you’ve taken a defensive driving course, your insurance company may reward you with a discount on your premium.

Equipment Discount

If your car comes with an anti-theft device or services like LoJack, your insurance company usually provides you with a discount.

Average Savings from Safety Devices

Safety/Anti-Theft DeviceAvg Annual PremiumDiscount
Passive Disabling Device$1,312$10
Tracking Device$1,314$9
Audible Alarm$1,317$6
Electronic Stability Control$1,318$5

Good Driver Discount

This discount is typically added automatically to your policy and tends to be pretty beneficial. Just like its name implies, this discount refers to having a safe driving record.

Multi-car discount

Like a multi-policy discount, a multi-car discount refers to having more than one car with a single insurance company.

Preferred Payment Discount

This method refers to the manner you chose to pay your insurance. While it varies by company, you can usually receive a discount if you pay your premium upfront, pay through your bank account, or opt for paperless billing.

Average Rates by Payment Plans

Paid In FullInstallmentsSavings

Profession Discount

Statistically, some occupations like teachers, physicians, or police officers are less likely to file a claim. Because of this, some insurance companies return the savings back to you.

Good Student Discount

Most companies will require the student on your policy to have a GPA above 3.0 in order to receive this discount. You can provide the insurance companies with a transcript or report card every policy period as proof.

Drive Safely

It might be a fairly obvious suggestion, but if you're already struggling to pay for car insurance you really need to take care while driving. If you're cautioned for speeding or file an at-fault claim, you'll be rated (or charged) for 3 years in most states. What's more, if you have a good driving discount, you will lose that and be ineligible for it until the citation or claim falls of your insurance record. All the more reason to drive safely. Below are some national averages for citations.

Average Increase in Annual Premium in 2016

Accident/ViolationPremium Increase
Speeding 11 - 15 MPH Over Limit$141
Speeding 16 - 20 MPH Over Limit$153
Speeding 21 - 25 MPH Over Limit$165
At-Fault Accident$306
Reckless Driving$499

Alternative Insurance Options

Because household income isn't directly used to determine monthly rates, most companies don't create special programs for low-income families. Still, there are a few state-operated programs and companies that are specifically designed to help.


California has a program called California’s Low-Cost Automobile Insurance Program, or CLCA, and is designed to provide low-cost insurance rates for eligible drivers.

What are the requirements?
  • Combined Household Income, based on the number of people:
    • 1 = $30,150
    • 2 = $40,600
    • 3 = $51,050
    • 4 = $60,500
  • A good driving record
  • No at-fault accidents in the past 3 years
  • Must be at least 19-years-old
  • Must own a valid driver’s license
  • Must own a car that is valued less than $25,000 
  • And, naturally, a California resident

If you meet the above qualifications and decide to opt to participate in CLCA, your insurance limits for bodily injury and property would actually be lower than the state limits. As participants in this program are exempt from state requirements, your limits would be $10,000 for bodily injury or death per person, $20,000 total for bodily injury or death, and $3,000 total for property damage. The amount of the premium ranges based on your insurance history, your county, and your age.

New Jersey

New Jersey’s plan, Special Automobile Insurance Policy (SAIP), provides only the medical coverage portion of your auto insurance after a car accident. Eligibility is dependent upon you already being qualified for Federal Medicaid with Hospitalization, which an insurance agent can determine from your Medicaid ID card.

How much does SAIP cost and what are the requirements to join?

SAIP costs $365 per year. This coverage is also dependent upon yearly renewal of your Medicaid benefits. For example, if your Medicaid benefits were to lapse mid-year, your SAIP benefits would continue until the next renewal.

What does SAIP cover?

This coverage pays for emergency medical treatment immediately following an accident, including the treatment of serious brain and spinal injuries up at $250,000. In the event of death, a $10,000 benefit is available.

What doesn’t SAIP cover?

As stated, this policy is for medical coverage only—so things like comprehensive or collision coverage aren't provided.


Hawaii provides a little more coverage for some of its residents through their state’s Aid to Aged, Blind, and Disabled program (AABD). This program, which provides free auto insurance for those who qualify, has a few requirements:

  • You are blind.
  • You have suffered from a physical or mental disability for at least 12 months which causes you to be unable to work.
  • You live with and take care of, someone who receives AABD benefits.
  • You have a terminal condition that prevents you from working.
  • Your Social Security or Supplemental Security Income doesn’t provide you with enough money.

How to get coverage under AABD:

Because this is a government program, you would need to speak with the Hawaiian Department of Human Services in order to receive any benefits from AABD.

Non-State Affiliated Programs


CURE, or Citizens United Reciprocal Exchange, advertises themselves as an insurance provider in New Jersey and Pennsylvaniathat only uses your driving record as a factor for your rate. It works pretty similarly to other insurance providers in terms of coverage options, discounts, and payment plans.

The Maryland Automobile Insurance Fund

The Maryland Automobile Insurance Fund is a government-created program in the state of Maryland specifically designed to provide liability insurance for residents who are unable to receive auto insurance on the open market. Independent from the actual state government, they cater to people who have been denied coverage because of poor or no credit, lapses in insurance, or a poor driving record.

To summarize: Low-income car insurance

Insurance companies can't use your income to determine your rate so we cannot definitively say the two are related. Still, looking at the use of your credit score, education, homeowner status, zip code, and insurance history, it is easy to see the two have an inverse relationship. Looking for discounts, shopping for car insurance every 6 months are great ways to start on saving on insurance when you can't change the previously listed variables. When those fail, consider government or other special programs help.

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