Rachael Brennan has been working in the insurance industry since 2006 when she began working as a licensed insurance representative for 21st Century Insurance, during which time she earned her Property and Casualty license in all 50 states. After several years she expanded her insurance expertise, earning her license in Health and AD&D insurance as well. She has worked for small health insuran...

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Written by Rachael Brennan
Licensed Agent for 15 Years Rachael Brennan

Chris Harrigan has an economic degree from Limestone College and an MBA from Clemson University. He previously managed auto insurance claims for Enterprise Rent-A-Car. Currently, he is using his business and insurance expertise to provide insurance data analysis and visualizations to enhance the user experience.

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Reviewed by Chris Harrigan
Former Auto Insurance Claims Manager Chris Harrigan

UPDATED: Jun 21, 2022

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Key takeaways...

  • All 50 states have financial responsibility laws
  • Severe penalties exist for driving without insurance
  • Several states offer discounted car insurance to low-income residents
  • You can also find inexpensive auto insurance by shopping online
  • Most car insurance companies offer various discounts

All 50 states require drivers to have auto insurance or otherwise prove they have the financial means to cover the cost of an accident. If you receive welfare due to low income, paying car insurance premiums can be difficult.

This difficulty affording insurance is especially true if you have blemishes on your driving record or credit report that place you into a higher risk category, resulting in more expensive premiums.

Fortunately, there are ways for welfare recipients to obtain inexpensive car insurance. Several states offer programs that provide discounted insurance to low-income residents.

Even if you don’t live in one of those states, you can find tools online to help in your search for affordable car insurance. Many companies offer discounts for things like remaining accident-free, being enrolled in school, and completing a defensive driving course.

Taking advantage of these perks keeps your premiums down.

Another way to save as much money as possible is to find the company that offers you the lowest rate. Enter your zip code above to compare rates for free.

Financial Responsibility Laws

To drive legally, you have to show financial responsibility. This means having the ability to pay for damages up to a reasonable level if you cause an accident.

Many states require minimum coverage auto insurance as the only acceptable form of financial responsibility. The minimum coverage is usually liability insurance. Liability coverage car insurance pays for damages to other parties if you’re in an at-fault accident. Other states allow you to forgo car insurance if you can prove you have a certain amount of liquid assets.

If you receive welfare, you probably don’t have significant assets, which means you need insurance to stay legal behind the wheel. Getting caught driving without the minimum coverage carries penalties, some of them severe.

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What are the penalties for driving uninsured?

You don’t want to get pulled over and not be able to show proof of insurance. The penalties for breaking financial responsibility laws range from a small fine to potential jail time if you’re a repeat offender.

Depending on your state, here are some possible consequences of driving uninsured:

  • Monetary fines
  • Driver’s license suspension
  • Impounding of car
  • Jail time (usually for repeat offenders)

Moreover, if you cause an accident while driving uninsured, you can get sued for any damages or injuries that result. Let’s say the crash causes $10,000 in damages to the other vehicle, and its driver has a $5,000 medical bill.

Since the accident was your fault, you are responsible for paying $15,000. If you lack insurance to cover those costs, your wages could be garnished and your assets seized.

Special Programs for Low-Income Drivers

As of 2017, three states offer special auto insurance programs for low-income drivers. These states are New Jersey, California, and Hawaii.

New Jersey’s SAIP Program

If you are a New Jersey resident, you can take advantage of the state’s Special Automobile Insurance Policy (SAIP). The stated purpose of the program is to cover residents who might otherwise drive uninsured due to limited financial resources.

This policy meets the minimum financial responsibility requirements for New Jersey drivers and is available to low-income state residents enrolled in Medicaid.

At an annual cost of $365, a policy from SAIP comes out to just over $30 per month, which is much less than other car insurance companies charge for coverage in New Jersey.

You can even get insurance with an imperfect driving record as long as your license isn’t suspended or revoked.

California’s CLCA Program

California residents can apply for the California Low-Cost Automobile (CLCA) program. It meets the state minimums for coverage levels and has a sliding cost based on your income and zip code. Most CLCA policies range from $300 to $500 annually.

Eligibility requirements include a demonstrated low income, a vehicle value of $25,000 or less, a clean driving record for three years, and an age of 19 or above.

Hawaii’s Free No-Fault Insurance

In Hawaii, you might qualify for free no-fault auto insurance if you receive Social Security benefits or financial assistance from the state.

Qualifying for this special program usually requires that you have a disability that prevents you from working or that you take care of someone with such a disability.

Shopping for Affordable Insurance

Suppose you don’t live in New Jersey, California, or Hawaii. That doesn’t mean you have to give up your driving privileges or risk driving uninsured. A little due diligence can make a big difference in your insurance cost.

Online tools make it easy to compare rates from different companies. You can find the lowest rate for your unique driving profile. For instance, if you have a DUI or multiple moving violations, most companies will charge you a higher premium.

However, certain car insurance companies specialize in providing affordable coverage to high-risk drivers. Shopping around enables you to identify these companies.

Something else for low-income people to consider is forgoing comprehensive coverage if you have an inexpensive vehicle. Let’s say the blue book value of your car is only $2,400. It makes little sense to pay, for instance, $200 per month for full coverage.

In the unlikely event of a total loss accident, you could replace your car for the cost of one year of insurance. Not every type of vehicle needs the same level of insurance.

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Finding Discounts

As part of your comparison shopping, you should be looking for discounts offered by different auto insurance companies. The insurance rate you end up paying is often less than the initial quote you receive because you may qualify for auto insurance discounts based on certain criteria.

For example, many companies offer discounted auto insurance premiums for being enrolled in school and maintaining certain grades, such as a “B” average. Others give you discounts for insuring multiple cars or bundling your auto policy with homeowners’ or life insurance.

Here are some popular auto insurance discounts to look out for:

  • Accident-free discounts/ safe driver
  • Good student discounts
  • Defensive driving discounts
  • Multi-car discounts
  • Bundling discounts

Having a detailed conversation with an insurance agent or customer service representative at each insurance company you consider can help to ensure you don’t leave any discounts on the table.

These discounts can make the difference in your auto insurance policy being affordable and it being unaffordable.

The cost of car insurance is one you must pay to drive legally. But it can be a burden if you receive welfare and have a low income.

Fortunately, several states offer special programs to help low-income drivers, and even in those that don’t, there are ways to find affordable auto insurance rates.

Compare car insurance quotes right now for free by entering your zip code below.