Low-Income Auto Insurance Options in the US
Last Updated on October 2, 2020
If you’re a low-income individual or family, then you may be eligible for various government programs – including low-income car insurance options.
Low-income households spend a disproportionately high percentage of their annual income on car insurance. A $1,500 car insurance policy accounts for 1% of someone’s income when they earn $150,000 per year. That same policy, however, accounts for about 7% of someone’s income when they’re earning the poverty line income of $22,500.
There’s a big problem with this stat: in many regions, driving isn’t a privilege – it’s a necessity. If you want to work or participate in the economy, then you need to drive.
If you’re a low-income individual or family, then a low-income auto insurance plan can be extremely beneficial. Today, we’re explaining everything you need to know about low-income auto insurance policies in your state.
Only Three States Offer Low-Income Car Insurance Policies
Is there low-income car insurance in America? First, let’s clear something up: government-sponsored low-income car insurance policies are the exception – not the norm. Only three states offer low-income car insurance policies, including California, New Jersey, and Hawaii.
If your income is below a certain threshold in California, New Jersey, or Hawaii, then you may be eligible for special car insurance discounts.
Of course, even if you’re outside of these three states, you may be able to access affordable car insurance options. By comparing quotes and choosing basic minimum liability plans, you can get affordable car insurance at any income level.
Next, we’ll talk about each of the three low-income car insurance options in California, New Jersey, and Hawaii, including the specific requirements for each program.
California’s Low-Cost Auto Insurance Program
California’s Low-Cost Automobile Insurance Program, or CLCA, was enacted in 1999. The goal of the government-run program is to provide affordable rates on liability car insurance to income-eligible drivers.
The CLCA requires drivers to meet certain eligibility requirements, including:
Income Eligibility: Your required income level varies depending on the number of people in your household and the combined income of all members of that household. As a general guideline, however, a household of four in California needs to earn about $33,000 per year to support their basic needs. In some particularly expensive parts of the state, like in the Bay Area or certain ZIP codes of LA, you qualify as low income if you make less than $60,000 per year.
Have a Good Driving Record: A good driving record helps with CLCA eligibility. That doesn’t mean your driving record has to be perfectly clean, but it certainly helps.
Age 19 or Higher: The CLCA isn’t designed to provide cheap car insurance for a 16, 17, or 18-year-old driver.
Current Valid Driver’s License: You must have a valid driver’s license to qualify.
Own a Car Valued at $25,000 or Less: The CLCA doesn’t insure high-value vehicles. However, in 2015, they raised the vehicle value limit from $20,000 to $25,000.
Other Considerations For The CLCA
If you meet the qualifications above, then you may qualify for the CLCA. If you qualify, then your auto insurance premiums will be capped at just $388 per year.
There’s a catch with this cheap auto insurance: CLCA insurance is lower than California’s standard minimum liability requirements. However, CLCA drivers are exempt from those requirements. With the CLCA, you get $10,000 of bodily injury liability coverage per person, $20,000 or bodily injury liability coverage per accident, and $3,000 for property damage.
You can learn more about California’s Low-Cost Auto Insurance program and other state programs here. Or, apply directly to the CLCA using https://www.mylowcostauto.com/ (yes, despite the cheesy name, it’s a government-run website).
Hawaii’s Low-Cost Disability Auto Insurance Program
Drivers in Hawaii pay surprisingly cheap rates for car insurance. Although most other costs of living in Hawaii are expensive, car insurance is relatively cheap because, simply put, Hawaii doesn’t have as much roadway as other states.
Low-income drivers in Hawaii are out of luck when it comes to government-sponsored cheap car insurance programs.
However, the state government does provide discounted auto insurance to individuals with disabilities.
If you’re a driver with a permanent disability who receives public assistance involving direct cash payments, then you may be eligible for free personal injury protection and liability insurance from the state of Hawaii. More information about this program can be found on Hawaii.gov’s Department of Commerce and Consumer Affairs Insurance website here: http://cca.hawaii.gov/ins/
New Jersey’s Special Automobile Insurance Policy
New Jersey has a low-income auto insurance program that can save you a lot of money on car insurance. The Special Automobile Insurance Policy, or SAIP, provides basic liability insurance to eligible low-income drivers.
Most standard insurance companies in New Jersey allow you to apply to SAIP. You don’t have to work directly with a government agency.
To qualify for SAIP, you must meet two basic requirements:
- Be currently enrolled in federal Medicaid
- Have a current valid driver’s license
If you qualify for New Jersey’s SAIP, then you’ll pay just $360 per year for car insurance (or $365 per year if you pay in two installments instead of upfront).
What Else To Know About The SAIP
The basic liability insurance covers emergency treatment offered by the SAIP immediately following a car crash, as well as costs related to serious brain or spinal cord injuries up to $250,000.
If your Medicaid coverage is canceled while under the SAIP, then you can keep your policy until expiration. You will not, however, be able to renew your license.
You can learn more about New Jersey’s SAIP here: https://www.state.nj.us/dobi/division_consumers/insurance/saip.htm
Final Word – Is There Low-Income Car Insurance in the United States?
Technically, only three states in America offer low-income car insurance plans.
However, there are still cheap car insurance options in every state. You can find cheap car insurance in all 50 states, for example, simply by choosing basic liability coverage in your area.
With basic liability coverage, you can pay less than $500 per year for car insurance. This basic car insurance allows you to legally drive on the road without breaking the bank.
To find cheap car insurance rates in your state, compare quotes online today. We have a no-cost comparison tool that makes it easy to shop for car insurance in your state. Enter your ZIP code at the top of this page to find low-income auto insurance options in your area.