Is there a such thing as low-income car insurance?

Low-income car insurance does exist, but low-to-moderate income programs (LMI) are only available in California, Hawaii, and New Jersey. If you need low-cost car insurance, there are ways to reduce your insurance costs without a low-income auto insurance program. Start by comparison shopping online to find cheap auto insurance rates in your city. Enter your ZIP code below to get your free quotes.

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Tonya Sisler has a Bachelor’s Degree from the University of South Carolina in Journalism and has worked for 15+ years in management. She has also completed a proofreading certification and is currently a professional writer.

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Brad Larson has been in the insurance industry for more than a dozen years. He started out as a claims adjuster for a national carrier. He has since switched to the agency side of the business. Brad is licensed in all P&C lines.

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Reviewed by Brad Larsen
Licensed Auto Insurance Agent

UPDATED: Jun 4, 2021

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Nowadays, having a car has become a necessity as people rely on their own transportation to get them to work as well as run errands and transport family members. Since more people are driving, more people are looking for cheap car insurance quotes which isn’t always easy to find.

With state laws requiring drivers to have car insurance coverage, finding affordable insurance can help in reducing daily living expenses. This is especially true for people in the low income category, since a larger percentage of their yearly income must go towards auto insurance coverage.

And while there really is no “standard” type of low income car insurance, drivers can still find a range of discounts and low income options depending on where they’re located in the United States. With access to the Internet, any driver, regardless of income status can find affordable auto insurance coverage online. To find and compare auto insurance easily, enter your ZIP code into the FREE tool above!

Auto Insurance Rate Factors

As state insurance laws determine minimum allowable car coverages, drivers in the low income range will at the very least have to purchase the minimum requirements. For most states, this comes in the form of liability insurance for property damage and bodily injury coverage.

The auto insurance market is highly competitive so some drivers may want to consider exploring other coverage options.

As each driver’s circumstances are different, what’s affordable for one person may not be the best deal for another. Auto insurance companies take certain factors into consideration when determining a person’s premium rate costs. Some of these factors include:

  • Age
  • Driving record
  • Type of car used
  • Car usage amounts
  • Credit history

So, someone with a clean driving history, drives an older model car and has good credit can qualify for affordable car insurance rates even with a low income level.

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Low Income Options

When low income is an issue, the type of car a person drives can considerably increase or decrease the costs to insure it. Older model cars typically have a low value in terms of repair and replacements. This means, drivers can skip purchasing collision and comprehensive coverage as a way to reduce their premium rate costs.

Collision insurance is designed to pay for replacement costs based on the value of a car if it’s damaged or totaled. Comprehensive insurance pays in the event of theft, vandalism, storms or any out-of-the-ordinary events that may occur. Since older model cars often carry minimal value, liability coverage may be all that’s needed to adequately insure the car.

Another way to take advantage of low premium rate charges is to pay premium payments on a long-term basis. This means, instead of opting for a monthly premium payment schedule, drivers should try to pay on a six month or yearly basis. Paying on a long term basis can reduce overall yearly insurance costs since companies apply interest charges onto shorter termed premium payment schedules.

People who drive their cars on an infrequent basis may benefit from a “pay-as-you-drive” insurance plan.

These plans charge reduced premium rates that are based on the number of miles a person drives within each coverage period. Auto insurance companies require proof of mileage, which must fall below a company’s stated maximum amount in order to qualify for the “pay-as-you-drive rate”.

LMI Insurance Programs

LMI, or low-to-moderate income programs are state-sponsored auto insurance coverage programs for people who have low to moderate income levels. These programs only exist in California, Hawaii and New Jersey though other states are considering offering similar programs so drivers outside these areas should still check with their state’s department of insurance office.

To qualify, California drivers must earn incomes no greater than at or below local poverty level cutoff marks. Eligible drivers receive liability coverage insurance at a rate of up to $400 a year. Actual premium rate charges can vary depending on what area of the state a person lives in.

The coverage options offered through LMI insurance programs typically only include the minimum coverage amounts as required by the state.

A person’s driving record and the value of the car used can also affect the premium rates charged to eligible drivers.

The state of Hawaii actually free no-fault coverage for people who are on public assistance, such as food stamps or Section 8 housing assistance. In New Jersey, eligible drivers pay $365 a year for accident-related medical treatment as well as death benefit coverage provided they are enrolled in the state’s Medicaid program.

LMI insurance programs are designed to help low to moderate income drivers find affordable car insurance, however drivers may still be able to find better coverage options by searching online.

Discount Options

When searching for low income car insurance, there are a couple ways to reduce overall insurance costs and find discount offers. Some auto insurers offer discounts to certain organizations or groups. The types of groups known to receive insurance discounts include:

  • Church organization members
  • Fraternal orders
  • Sorority groups
  • Military affiliations
  • Volunteer members of certain organizations
  • College Alma Matter affiliations

So, if someone is a member or decides to join one of these eligible organizations, auto insurance discounts may an available option.

As auto insurance companies base a person’s premium rates on low, standard and high risk factors, drivers who equip their cars with safety features may qualify for reduced premium rate coverages.

Some safety features to consider include security systems, anti-lock brakes, gas shut offs and lo jacks. If a company views an added feature as reducing the overall risk involved with insuring a car, the driver may qualify for a policy discount.

Another way of qualifying for an auto policy discount is if a person has multiple policies with the same company. So, someone with home, car and life insurance policies through the same company should quality for a multiple policy discount. This may require drivers to change insurance carriers from one company to another. Enter your ZIP code into the FREE tool above to find and compare auto insurance easily!

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