Low-income earning individuals are at a greater need to get cheaper car insurance policies than any other group of people. Today, I want to share some tips for anyone who only able to pull in $30,000 annually. These folks often have a hard time getting an affordable policy that offers them good coverage.
As such, any low-income earner looking for a cheap and suitable policy needs to educate themselves on all the different aspects of the policies provided by all the providers in their area. Often, people end up paying more than they should due to lack of proper knowledge regarding the nitty-gritty of their insurance contracts. Insurance providers are in a business after all; they aim to make as much as they can from you and do not mind doing it as long as they are within the law. Thus, if you are well informed about these policies, you will stand to negotiate a better and more affordable auto policy for yourself.
This blog will show you various ways that you can use to get cheaper auto insurance.
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State-Sponsored Auto-Insurance Options for Low-Income Earners
There are a few states which offer special auto insurance for people who cannot afford insurance. These states include California, New Jersey, and Hawaii.
California’s Low-Cost Automobile insurance program provides liability and underinsured motorist protection for individuals who are eligible. The eligibility requirements include being within 250 percent of the federal poverty limit, owning a car that is worth less than $25,000, and a good driving record.
The New Jersey Special Automobile Insurance Policy only offers coverage for emergency medical costs in case you get into an accident. As such, it will not cover your vehicle’s damages or any liability costs that you might incur. Nevertheless, New Jersey law still considers drivers covered by this policy as driving with insurance. The drawback to this policy – and it is a major one – is that you get very minimal coverage. The eligibility requirements are simple – you must have Medicaid.
Hawaii’s program is part of its Assistance to the Aged, Blind, and Disabled services. As such, it is a service that offers free car insurance to individuals that are over the age of 65 or are disabled and earn an income that is below the 34 percent line of the federal line.
If you live in the above states and are eligible, those state-sponsored insurance options are worth considering. Nevertheless, the majority of the people either do not live in those states, might not meet some of the prerequisite requirements, or cannot do with the minimal coverage provided.
If that is the case, the following are ways you could use to get affordable car insurance.
Tips to Getting Cheap Auto Insurance
1. Do Some Window Shopping
It is not uncommon for insurance rates to vary widely between couriers. One provider might view you as average risk and charge you at average rates while another might see you as a preferred risk and charge you at much lower prices. In the same light, another might see you as a risky proposition, and charge you at above-average rates. Therefore, you do not want to settle for the first courier your meet. Look around, and you might get a better proposal.
There are various methods you could use to make your shopping easier. They include speaking to your and family about their coverages, contacting an independent agent, or using an online quoting website.
Independent agents typically have access to many insurance companies and, therefore, can serve as knowledgeable guides to the best provider for you, thus saving you the hassle.
If you can find your way around the web, there are some online quoting sites whose sole purpose is to help you get the cheapest provider as quickly as possible. Just ensure that the people and sites you contact are reputable.
For example, this site Nerdwallet.com collect your information and your vehicle to come up with the best rate from each company. When filling out the information, here are couples factor that can really determine the price:
- Year of vehicle: older car gets cheaper insurance rate
- Purpose of vehicle: between commute, please or business, commute means the car will be on the road more therefore higher insurance rate
- Annual mileages: the lesser the mileages, the lower the rate. Also, if they ask how far from your home to work, lesser mileages are better too.
- Anti-theft locking device: if your car has this installed, it could bring your rate a little lower depends on the carriers.
2. Adjust Your Coverages
When looking at your car insurance quote, decline any coverage that you do not need or even drop them entirely if they are already on your policy. You also stand to reduce your costs substantially if you lower your liability limits.
Nevertheless, you stand to make the most significant savings by dropping collision/comprehensive coverage. Even though your car will no longer enjoy coverage against physical damage, it does not make financial sense to continue paying for collision coverage if the vehicle is worth less than a few thousand dollars.
The rule of thumbs is Higher Deductible means Lower monthly rate. Picture below is the from the Bodily Injury Liability coverage from my Geico insurance. Right now I have it set up at $50,000 with the payment of $146.10 every 6 months.
If I decrease the coverage down to $15,000, my payment every 6 months will be $104.40.
3. Own an Older Car or One That is Inexpensive to Insure
Typically, cars that are older, smaller, and fitted with a lot of safety features are also the most inexpensive to insure. For instance, an eight-year-old minivan is going to be much cheaper to insure than a new SUV. As such, if you are looking for a car and still want cheap insurance, consider either buying a used car or one that meets as many of the above characteristics as possible.
4. Get Your Credit Score in Order
While it is generally considered malpractice to use one’s credit score to determine their insurance rate, it is still a common practice among insurance providers. Reason being insurance carriers will often consider reports from the Federal Trade Commission which have revealed that a driver with a low credit score is much more likely to file a claim than one with a high credit score. A State of Insurance report concurs with the above narrative in that individuals with poor credit usually pay nearly twice as much for auto insurance than those with good credit.
Understandably, many factors surround one’s credit rating. Nevertheless, the premise that raising your credit score will significantly reduce your car insurance costs remain true.
5. Consider Pay-Per-Mile or Usage-Based Insurance
If you are a good driver that does not log many miles, you should consider a usage-based insurance policy such as State Farm’s Drive Safe & Save, Progressive’s Snapshot, or Allstate’s Drivewise. When you sign up for these programs, your insurer will track your usage in exchange for various discounts on account of how much you are driving, when you drive, and good you drive.
6. Learn More about Their Discounts
A lot of insurance providers offer additional discounts to promote safe driving. Even though different insurers offer different discounts, most are similar. Therefore, it is imperative that you ask your insurer about these discounts.
Nevertheless, the most common discount among insurers is that for safe driving. If you go for years without a traffic ticket or an at-fault accident, the insurer is likely to give you a discount. The most significant discount for safe driving can be made if you use an auto insurer who uses software to track your driving habits.
Unfortunately, a recent study by the Consumer Federation of America revealed that, on average, auto insurance companies charge low-income earners for coverage than high-income earners. This is because low-income earners, on average, are more likely to live in high-crime areas or have poor credit scores, thus making them more likely to file claims.
Take away points
While using one’s income to determine their rates is not constitutional, they will find other methods to factor it in indirectly. As such, it is up to you to ensure that you educate yourself as much as you can on the various ways you can go about making your life easier. Utilize the above tips to get yourself a cheaper car insurance coverage.
