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Government Auto Insurance Discount for
Low Income Individuals & Seniors

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Car insurance is a must if you own a vehicle, regardless of your income level. Unfortunately, for those who have low income, budget is limited and your options for car insurance are quite limited. Finding affordable car insurance is necessary but it is not always easy.

First and foremost, there are different state requirements when it comes to minimum auto insurance coverage. It is best to look into that prior to shopping for car insurance policies so you can use that as a point of comparison. There is nothing easy about deciding whether to use your money to pay for car insurance or to buy food for your family. However, this is a reality that a lot of people are living in, especially seniors who have limited access to income.

In this guide, you will learn about government auto insurance programs and ways that you can make insurance affordable even when you have a low income.

Government Auto Insurance for Low Income Individuals & Seniors

State Government Assisted Car Insurance

Government auto insurance programs are available for those who are unable to afford payments for their car insurance. Depending on where you live in, driving your own vehicle is a necessity (due to limited access to public transportation). This can put you in a difficult situation if you are already having difficulty making ends meet.

State government assisted car insurance is designed for this specific purpose. The state government can provide financial assistance to low income individuals or families who find that auto insurance rates are too expensive.

There are certain eligibility requirements that you need to comply with before you can apply for and qualify for the state government insurance programs. Since these programs are designed for those low income drivers, don’t be surprised that the eligibility requirements are largely financially based.

  • The local government will evaluate the poverty income statistic that is released every year.
  • To qualify, a low-income driver must fall below or within the poverty level. Each state program will have their own discretion on how to evaluate applicants.
  • Family size is also a factor. Those with limited income with a large family are more likely to qualify for the program.

Unfortunately, not all states have established auto insurance programs to provide financial assistance to eligible drivers. As of this writing, state government assisted car insurance is only available in states such as California, New Jersey, and Hawaii. Another state that has this type of program is Maryland; however, this program is not funded by the state government.

In order to benefit from this program, you must first meet certain qualifications. The specific requirements will vary per program per state. Therefore, it is best to look into that to help you determine if you may qualify for this type of assistance.

You may learn about the individual requirements for each state program below:

  • California – The California Low-Cost Automobile Insurance (CLCA) program was established for low-income drivers in the state. It’s goal is to provide assistance for low-income drivers with good record to obtain affordable auto insurance. It is currently available in major cities like Los Angeles, San Diego, San Francisco, Fresno, Alameda, to name a few. To qualify, you must be over 19 years old and have at least 3 years of driving experience. The vehicle must not cost over $20,000 and must satisfy the income requirements.
  • Hawaii – In Hawaii, the state government assisted auto insurance program is designed for those with disability. Known as the Aid to the Aged, Blind, and Disabled (AABD) program, it aims to provide supplemental security income insurance for qualified drivers. The qualifications vary based on the applicant’s personal circumstances so you may apply and the local government will evaluate if you are qualified.
  • New Jersey – In New Jersey, the cost of auto insurance is among the highest in the US. Thankfully, the state has established the Special Automobile Insurance Policy (SAIP), which offers affordable auto insurance coverage for those who are eligible. This gives drivers Medicaid benefits, which is much cheaper than if you were to buy them from a private insurance company.

As mentioned above, the state of Maryland has its own auto insurance program that is designed to provide assistance to low income drivers. This is made possible through the Maryland Auto Insurance Fund. This program was established in 1972 and offers Maryland residents insurance coverage of up to $20,000. The specific details about how to qualify for this program are available on the official website of the Maryland State Government.

You might be wondering why only three states offer state government assisted insurance programs right now. The reason for this is that income is rarely a factor used by insurance companies to evaluate rates for drivers. Therefore, it is very likely that someone with an annual income of $30,000 will be paying the same auto insurance rate as someone who earns $200,000 annually.

The National Association of Insurance Commissioners (NAIC) along with the Consumer Federation of America (CFA) have consistently recommended changes to how this is approached. In particular, they are pushing for factors like income to impact how insurance rates are calculated.

Based on this research, access to a car is no longer a luxury but an essential. Many households depend on having access to a car as a means for making livelihood. Therefore, the cost of car insurance is something that affects everyone, especially those in the low income bracket.

Government Auto Insurance for Low Income Individuals & Seniors

Car Insurance for Low Income Individuals

Out of the 50 states in the US, 49 of them require you to carry auto insurance if you drive your own vehicle. This would equate to thousands of dollars’ worth in car insurance premiums paid off each year. According to the Insurance Information Institute, it costs more than $1,200 to insure a sedan vehicle in the US (as of 2019). The bigger and more expensive the vehicle you are driving is, the higher the insurance cost.

Even on the low end of the car insurance rate, insuring a vehicle can be still pretty expensive. If you are already low on income, it can be difficult to allocate a budget for the insurance as you are already working with limited funds.

One of the recommended solutions is to participate in any one of the state government assisted car insurance programs listed above. However, this is only available in 3 states (California, Hawaii, and New Jersey). Therefore, you can only participate in these programs if you are a resident of any of these states. If not, you can look for alternatives on how you can secure affordable insurance for your vehicle.

Here are additional tips that you might want to consider to help you save on insurance costs for your vehicle.

Shop Around

The first step is to shop around to find the best insurance companies that can give you affordable rates. There are several factors that can impact your car insurance rate so it pays to know what these factors are beforehand.

The city where you live in, the population density of the area, and the type of vehicle you are driving can all have an impact. In addition, the driver’s history is also an important factor that insurance companies look into to assess your rate.

Bundle Your Insurance

Another trick to save on car insurance cost is to bundle your policy. This type of product is offered by insurance companies to entice consumers to buy multiple insurance policies from them. As a result, you can get a huge discount on this bundled policy.

If you are going to buy multiple insurance policies, you might as well get them from one insurance provider to get a discount.

Take Advantage of Any Discount

There are numerous discount offerings provided by various insurance companies. These discounts include loyalty discount, low mileage discount, defensive driving discount, or special groups discount (such as military or seniors).

Find Cheap Auto Insurance Companies

The car insurance rates may vary by state and per driver. However, you will be able to have a good idea of how much rate you can get charged for based on the average annual rates given by insurance companies.

For your guidance, here is a glimpse of the average annual insurance rates by company.

  • American Family - $1,282
  • USAA - $2,388
  • Nationwide - $2,908
  • Farmers - $2,549
  • Travelers - $2,173

When asking for a quote, you can get more discounts from these insurance companies when you have good driving record and a good credit score. Feel free to ask the insurance representative for any of these companies about how you can qualify for a discount.

While there is no such thing as a free auto insurance, you can use the tips and recommendations above to help you find a car insurance policy that you can afford.

Car Insurance for Low Income Seniors

If you are a senior driver, you are also faced with another challenge when it comes to obtaining car insurance: you will be quoted with a higher price. Why is this so? According to insurance companies, senior drivers are considered higher risk because their reflexes might be slower than younger drivers.

The average cost of insurance goes up as you get older. For example, someone aged 50 will be charged a monthly premium of $494 on car insurance (or up to $1,363 annually). When you hit the age of 60, this rate goes up to $515 a month (or $1,402 per year).

Unfortunately, this poses another problem: many seniors depend on low income that makes it difficult for them to afford the high insurance rates. Most seniors depend on their pension payments as they are typically out of employment at this age and, therefore, have no other sources of income.

There is help from the state government, though. Many states have mandated that there should be discounts given to drivers that are over 55 years of age, especially if they have a good driving record.

It is also a good idea to start your search within insurance companies that specialize on offering cheap car insurance no immediate payment options for seniors. Below is the list of the top insurance companies to check out and the average annual rates for senior drivers.

  • GEICO - $528
  • Progressive - $775
  • Allstate - $828
  • Farmers Insurance - $1,162

For senior drivers with low income, it is important to check if you qualify for any of the state government assisted insurance programs to get the cheapest rates possible. Or, you can shop around for discounts and do your best to maintain your health and a good driving record. This will enable you to qualify for more competitive rates on your insurance policy.