How to Get Low-Cost Car Insurance

Auto insurance is one of the largest expenses in many low- and moderate-income households. It exceeds spending on auto financing, life and other personal insurance premiums.

The federal government’s 2010 Consumer Expenditure Survey estimates that LMI households spent $30 billion on car insurance.

State-sponsored car insurance

In three states, California, Hawaii and New Jersey, low-income drivers can get affordable car insurance through government programs. These policies usually require a certain amount of income, a history of government assistance, a driver’s license and clean driving record.

State-sponsored car insurance for low-income drivers is a lifesaver for many people who can’t afford private coverage. However, it doesn’t offer as much protection as standard insurance, so it’s not an option for everyone.

Another program for low-income residents in New Jersey is the Special Automobile Insurance Policy (SAIP). SAIP covers only emergency medical costs.

These policies are a last resort for low-income drivers, and you should only opt for them if your other options have failed. If you do, keep in mind that you may be penalized when you lapse your coverage. Plus, providers often raise your premiums when you buy again.

Non-state programs

The good news is that there are a few non-state programs to help low-income drivers get the best car insurance for the money. Citizens United Reciprocal Exchange (CURE), for example, uses your driving history to calculate your rate and provides insurance to people who might otherwise struggle to find affordable coverage.

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The other option is Hawaii’s Aid to Aged, Blind and Disabled program (AABD), which offers free auto insurance to senior citizens. This program is available to individuals who are 65 or older and meet the Social Security Administration’s legal definition of disabled.

California’s Low Cost Automobile Insurance program also offers low-cost liability protection to income-eligible drivers. To qualify, applicants must be within 250% of the federal poverty level, own a vehicle worth less than $25,000 and have a clean driving record.

Shopping around

The best way to save money on car insurance is to shop around. Not only can this help you save a bundle, but it also allows you to compare coverage and rates from multiple providers and learn more about the company before you make a decision. Taking a few minutes out of your busy schedule to shop around will pay off in the long run. The most effective way to do this is to use a free online quote comparison service. The company should be able to provide you with several different quotes from top-notch carriers. It should also allow you to choose your own coverage levels and customize your policy. The company may also offer you a discount on your next policy if you decide to stick with them. The most important thing to remember is to be patient and to keep your budget in mind at all times.

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Pay-per-mile car insurance

Pay-per-mile car insurance is a low-cost alternative to full-coverage policies that pays for miles driven. You can get this type of coverage with most insurers, including Allstate, Liberty Mutual and Nationwide.

A typical pay-per-mile auto insurance policy consists of two parts: a base rate and a per-mile charge. The base rate is based on factors like age, location and driving history, while the per-mile portion depends on the actual number of miles you drive each month.

Several pay-per-mile auto insurance companies use telematics to track your driving habits. This technology is used in a variety of ways, but most include a device that plugs into your car’s odometer or a smartphone app that uses location-sharing to record the miles you drive each month.

Some smaller companies, such as Mile Auto, offer pay-per-mile auto insurance without using telematics to track your driving. In that case, you’ll need to send a picture of your odometer to the company once a month.