Having auto insurance can be expensive, but it is legally required for most drivers. Because of the potentially high cost, many people find themselves in a situation where they wonder, “I can’t afford my auto insurance, what should I do?” This guide will discuss your choices if you can’t afford your car insurance policy.
Our expert team carefully reviewed every major car insurance provider and then identified the best companies in the industry for cheap auto insurance. Use our quote tool below to get free car insurance quotes by just entering your ZIP code.
If I Can’t Afford My Auto Insurance, What Should I Do?
It can be incredibly overwhelming figuring out where to start in an attempt to lower your car insurance costs. The following do’s and don’ts should help get you started if you are wondering about your next steps when you can’t afford insurance.
The Do’s
- Look at your coverage to see if you can drop anything from full coverage auto insurance. If necessary, consider reducing your coverage limits, so you meet but do not exceed your state’s minimum. Keep in mind though that you want to feel comfortable with your coverage should you get into an accident.
- Look for car insurance discounts that you may have looked past when you originally signed up. There may be discounts for holding a clean driving record or a good credit score, for taking a defensive driving course, or for having homeowners insurance. You may also find a good student discount or decreased rates for being a safe driver.
- Shop around and look at car insurance rates from multiple providers.
- Think about taking on a higher deductible to lower your monthly payments.
- Consider if you can stop driving completely. If you don’t drive, you won’t need auto insurance.
- Take a closer look at different areas of your budget. See if you can cut other expenses to free up some disposable income to pay for your auto insurance bill.
The Don’ts
- When reducing coverage, do not drop it altogether. This is crucial as your state likely requires all drivers to have auto insurance and levies heavy penalties for driving without it. Punishments can include fines or suspension of your license and registration. Depending on your state, you may even serve jail time if you drive without insurance.
- Never lie to your insurer. This could potentially reduce your monthly rate, but if your provider finds out, you could be in serious legal trouble.
- Don’t increase your deductible to an amount you will not be able to pay for in the case of a car accident.
When Can You Drop Insurance Coverage?
One of the most tempting ways to afford auto insurance is to drop some of your coverage. Only do this with the types of auto insurance that your state does not legally require.
The most popular option is to drop collision coverage or comprehensive insurance. The caveat here is that you should only drop these if your car has lost the majority of its value, usually when it is at least 10 years old.
Comprehensive coverage protects against types of property damage such as vandalism, accidents with animals, fire, theft, hail and similar issues. Collision insurance helps to provide funds for repairing or replacing your car in the case of a car accident. You can likely drop these if your car does not have a high value, as you may start paying more in insurance premiums than your car is worth. At the very least, the amount of money that insurance saves you decreases significantly over time. Dropping coverage would not make financial sense for a new car, but it works well with the cheapest cars.
To decide if it makes sense to drop comprehensive or collision insurance coverage:
- Look at your car’s value according to your insurer.
- Compare this with your deductible and monthly car insurance premium.
- Decide whether your car is worth enough to keep paying for coverage.
If you are in a tough financial situation, you can drop comprehensive or collision insurance to just meet your state’s minimum. Remember that you cannot get away with having no car insurance. All states except for New Hampshire and Virginia legally require it, and you’ll face fines or other penalties if you have none. Some states require uninsured motorist insurance for each new policy in addition to liability coverage.
It is also worth noting that if you lease your car or are still paying it off, your lender may require you to have additional types of insurance. Some lenders, for example, require collision insurance.
Are There Federal Programs For Low-Income Insurance?
There are no federal programs for low-income car insurance for one simple reason: The government does not consider ownership of motor vehicles to be a requirement. Remember that standards for auto insurance are set only at the state level.
California, Hawaii and New Jersey have public car insurance programs which are also known as government auto insurance. These are usually great solutions for low-income families, as they offer cheap car insurance. The programs typically have upper limits on one’s annual income, but provide an excellent solution to those who qualify.
California has the Low-Cost Automobile Program (CLCA). This program only provides assistance in buying the state’s minimum required coverage, which is liability insurance.
In Hawaii, those who receive public assistance can qualify for free no-fault insurance.
New Jersey residents can take advantage of the Special Automotive Insurance Policy (SAIP). If you qualify for this program, you can pay just $365 per year for limited insurance. To qualify for this program, policyholders must receive federal Medicaid benefits that include hospitalization. This policy covers emergency treatment following a collision.
Our Recommendations For Auto Insurance
As mentioned, one of the actions to take if you find yourself wondering, “I can’t afford my auto insurance, what should I do?” is to compare offerings from the best auto insurance providers. To make this easier for you, we gathered our top recommendations for auto insurance companies.
We also encourage you to use the quote box below. You can find cheap rates when you compare car insurance quotes from multiple providers, and you can immediately begin finding auto insurance rates by ZIP code.
GEICO: 9.1 out of 10.0
GEICO is our top recommendation for insurance, whether you want to save money or get full coverage. While it is particularly helpful for students and for those in the military, anyone can benefit from the company’s cheap rates.
In addition to a 9.1 out of 10.0 overall rating, our experts awarded GEICO stellar scores for its industry rating, coverage, average cost and customer service standards.
USAA: 8.9 out of 10.0
USAA is a unique auto insurance option that is only available to military members and their families. If you qualify, though, the provider is well worth considering. In our expert review, the insurance company earned a 9.0 out of 10.0 for industry reputation, cost and customer experience, with a slightly lower 8.5 out of 10.0 for coverage.
State Farm: 8.5 out of 10.0
With an overall score of 8.5 out of 10.0, State Farm stands out as a good option for everyone, with particularly strong choices for students and teens. Our team gave State Farm a 9.5 out of 10.0 for its industry reputation, an 8.5 out of 10.0 for coverage and a still-respectable 8.0 out of 10.0 for cost and customer experience.
Methodology
The Detroit Bureau collects data from every major car insurance provider to formulate rankings of the best insurers. Our in-depth rating system takes into account market share, coverage, pricing, customer satisfaction and ratings from industry experts. Each insurer is given a weighted score in four categories, as well as an overall score out of 10.0.
We recommend auto insurance companies based on these rankings, but we also encourage you to perform your own research and compare quotes to find the best coverage.
