Low-Income Car Insurance

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Car insurance is legally required in most states, but it’s a major financial strain for many Americans. According to the Insurance Information Institute (III), the average annual cost of car insurance in the United States is $1,009, which is roughly $84 a month.

Although the price of car insurance varies significantly by state, it’s not cheap. Low-income individuals who can’t afford car insurance are more likely to forego insurance coverage altogether, which can land them in serious trouble.

However, low-income individuals who struggle to pay for standard insurance have another option—enroll in a low-income auto insurance program. In this article, we’ll explain who qualifies as low-income and what states offer a low-income insurance plan.

What is low-income car insurance?

Low-income car insurance is a type of insurance that is available exclusively to low-income families. It allows people who can’t afford standard car insurance to get coverage that is less expensive. Ultimately, the goal of low-income car insurance is to reduce the number of uninsured drivers on the road.

Low-income car insurance is offered at the state-level, but it’s not widely available. There are only a handful of states that offer this type of insurance. Each state has its own requirements for low-income car insurance, and not everyone is approved for coverage.

Typically, you’re considered low-income if you make under a certain amount of money, and are enrolled in one or more government assistance programs. You also have to have a valid driver’s license in your state of residence, and have a clean driving record. Many states also have requirements for the value of your vehicle.

Low-income car insurance is considered to be a last-resort option for drivers. You should only apply for low-income car insurance if you’re unable to find private insurance that you can afford. Although low-income car insurance is cheaper, it doesn’t offer as much coverage.

State-sponsored options for low-income families

Currently, only three states offer a low-income car insurance option—California, New Jersey, and Hawaii. Here are the eligibility requirements for the three plans.


Low-income drivers in California can sign up for the California Low-Cost Automobile program (CLCA).

To qualify, your annual income must fall within 250 percent of the federal poverty level. You must have a valid California driver’s license, your car must be worth less than $25,000, and you need to have a clean driving record.

The CLCA program only offers liability and property damage coverage. Uninsured motorist and medical payments coverage is optional.

New Jersey

New Jersey’s low-income car insurance program is called the Special Automobile Insurance Policy (SAIP). Besides a valid New Jersey license, the only requirement is that drivers must be enrolled in federal medicaid with hospitalization.

Unlike other plans, this one just covers emergency medical costs if you get into an accident. It doesn’t include coverage for liability or vehicle damages.

Insurance from SAIP costs only $365 a year, which is significantly cheaper than private insurance.


Low-income drivers in Hawaii can get affordable coverage through the Assistance to the Aged, Blind and Disabled program (AABD).

This program is only available to Hawaii residents who are 65 or older and meet the Social Security Administration’s legal definition of disabled or blind. Additionally, your income must fall below 34 percent of the 2006 federal poverty level, and you can’t be receiving aid that exceeds $2,000 for one person or $3,000 for a couple.

Who should get low-income car insurance?

Low-income car insurance can be a lifesaver for people who can’t afford private coverage. However, it’s not the best option for everyone.

You should only get low-income car insurance if you can’t afford any type of private insurance, even with discounts.

However, low-income car insurance coverage is limited. It’s not the same insurance you would get through a private provider. Most state-sponsored insurance programs offer minimal coverage to keep the price low. For instance, California drivers in the CLCA program only get liability and property damage coverage.

Low-income car insurance is a good option if you need coverage to avoid driving completely uninsured (which is illegal). It’s not a good option for anyone who is looking for comprehensive coverage. Low-income car insurance often has significant gaps that could lead to out-of-pocket expenses if you have to file a claim.

How income affects car insurance rates

Technically, your income does not impact your car insurance rate. Unlike a loan, insurance companies don’t review your income to determine if you should get approved for coverage.

Instead, insurance companies use other factors, like your credit score, claims history, age and zip code to calculate your premium.

However, many of those factors relate to your income level. For example, if you have a low credit score, it could be because you have debts you can’t afford to pay off because of your income. People with a low credit score pay more money for their car insurance because they are considered high-risk.

Additionally, people with a low income might live in a neighborhood with a higher rate of crime. Individuals who live in zip codes with above-average rates of crime and theft tend to have higher insurance premiums.

Frequently asked questions

Who has the cheapest car insurance?

The cheapest car insurance companies vary by state. Additionally, every driver pays a different rate based on their zip code, age, credit score, claims history, the car they drive, and so on. Based on our own research, Geico, Nationwide and State Farm tend to offer consistently affordable premiums.

What are ways to save on car insurance?

There are a number of ways drivers can save money on car insurance. Take advantage of discounts, raise your credit score, increase your deductible, take a defensive driving course and shop around for quotes to make sure you’re paying the lowest rate.

How much does private car insurance cost?

In the United States, the average cost of car insurance is $1,009, or $84 a month. According to the III, the most expensive states for insurance are Louisiana, Michigan and Florida. The cheapest states are North Dakota, Maine and Iowa.