14 Solutions For When You Can’t Afford Car Insurance

can't afford car insurance

Insurance can cost a pretty penny. 1-in-8 can’t afford car insurance or go without it for other reasons. Doubly so if a driver is new, or has a recent accident or SR-22 under their belt. Unlike with Medicaid for health insurance, there is no low-cost federal option for auto insurance (except in CA, NJ and HI). It is not seen as necessary for people to have in the same way. Fortunately, there are many ways to remedy this costly problem.  

Ways to Reduce Auto Insurance Costs

Modify Policy

One of the easiest ways to start ratcheting down an insurance bill is to tweak the policy itself. There are two main ways to do this: increasing deductibles or reducing liability coverage (which can be risky).

1. Increase Deductibles

One of the easiest ways to drop the price of premiums is to increase deductibles on comprehensive and collision coverage. Going from a $250 to $500 or $1000 deductible has a significant impact on the price of those coverages.

2. Reduce Property Damage and Bodily Injury (i.e. Liability) Coverage

While riskier than increasing deductibles, reducing liability coverage also reduces the price. Try a few different coverage levels and compare how prices change. Going from the minimum to one step above will not likely cost much.

3. Change the Primary Driver

If a driver is married or lives with a significant other, they can try listing the other driver as the primary driver. We cannot confirm this works, but if the other driver is a female or has a safer record, it may have some effect. If someone has tried this, please let us know in the comments.

Try Other Insurance Types

4. Pay-Per-Mile Insurance

A few insurers use a different type of business model. Instead of a flat monthly premium, they charge drivers only for the number of miles they drive. Targeted at driver’s who do not need to drive much these policies can offer significant savings. One caveat is that it requires installing a “telematic” monitor on the vehicle. This sends previously private driving data back to the insurer for their use. MetroMile and Esurance appear to be the main companies offering this service, and only in a few states. Metromile serves California, Illinois, New Jersey, Oregon, Pennsylvania, Virginia, and Washington. Esurance only serves Oregon. Alternatively, many insurers offer these telematic devices for driving discounts in many other states.

5. Co-op Insurance

Co-op insurance is available in New Hampshire and Vermont (and possibly other states). This type of insurance can often charge lower rates because they operate as nonprofits. Due to their lower overhead, it can make them a more affordable option.

6. Uninsured Motorist Fee

Some states, including South Carolina and Virginia, have another option. They allow someone to drive without insurance if they pay the DMV an uninsured motorist fee. This generally costs upwards of $500. It is important to note that this offers zero protection from liability if accidents occur.

7. Cash Deposits

A few states allow drivers to deposit cash with the state’s treasury department in lieu of insurance. The downside is that they require the driver deposit at least the minimum amount of legally required liability coverage. Since this is generally $25,000 and up, it is not the most affordable option but is an alternative.

8. Auto Surety Bonds

Other states allow what’s known as surety bonds. A driver purchases one of these bonds for a certain coverage amount. The benefit is that they only pay a percentage of the total coverage amount up front. If an accident occurs, the driver then pays the rest of the bond to the other party making a claim against them. If the driver cannot pay, the surety agency (who sold the bond to begin with) steps in to cover the claim. The driver then continues to repay the bond over time to the surety agency.  

The amount a driver has to pay up-front varies by credit score. Someone with a good score may only pay 1-4% of the total bond. Those with worse credit may have to pay between 5-15%.

While 32 states allow these, 22 of them need the driver to own upwards of 25 vehicles. The ten that does not are Alaska, Connecticut, Georgia, Hawaii, Indiana, Maryland, New Mexico, North Dakota, Pennsylvania, and Vermont. The table below details the bond requirements by state.

Surety Bond Requirements by State

* Drivers need to also meet the state’s minimum for personal injury protection, unless waived, and uninsured motorist coverage.

** Or $30,000 in securities.

Source: Property Casualty Insurers Association of America, state insurance and motor vehicle codes.

Change Other Factors

9. Get a Cheaper Used Car

While not the simplest option, buying a cheaper used car can also help with insurance premiums. The value of a new vehicle depreciates quickly in the first few years, Insuring them before they have depreciated much can significantly bump up costs. Used cars over five years old that have high scores for safety and reliability are the best characteristics to look for. Consumer Reports maintains an excellent library of car reviews. Though they require a subscription, most public libraries have them viewable for free. To find out the value of different vehicles, Kelley Blue Book offers a free calculator.

10. Pay Off Credit Cards and Debt

In almost every state (except CA, HI, and MA) insurers use credit scores to help determine insurance prices. Thus, increasing one’s credit score can lead to reduced costs. This sort of change will not reduce prices overnight. Insurers tend to only check credit scores at renewal time. But then again, it takes time to increase a score. So having a few months to nudge it higher may work out for the best. One downside is the difficulty of actually viewing one’s insurance credit score (which differ from regular credit scores) to see progress.

11. Shop Around for a Different Insurer

Geico does not lie when they say that 15 minutes can save you 15% on car insurance. Looking around at other insurers is probably the cheapest way to have the largest impact on your premiums. The list of all the available companies in your state is a good place to start. Also, keep in mind the discounts that most often apply when getting a new policy.

12. Increase Income

Somewhat of a different option, but there are many ways to earn a little change on the side these days. Websites like Upwork and Fiverr allow people to use their skills for individual gigs. There’s also the possibility of spending a few hours a week driving for Lyft or Uber. Be sure to determine if it is worth it financially beforehand. A special auto insurance policy is also necessary.

13. Move to Cheaper Location

Certainly the least practical option, but that’s why we list it last. A driver’s location is a major factor when insurers calculate the price of a policy. Naturally, the effect is more drastic when one compares a major city to a suburb. But even within a single town or city, certain zip codes may be considered higher risk than others. Relocating to a lower risk location can offer some savings, though compared to the cost of moving, it is probably not a good enough reason on its own.

14. Cancel Insurance Policy

Rates Likely to Go Up

If possible, avoid canceling a policy altogether. Not having a policy for any duration creates a lapse in your insurance record. Insurers are not fond of this. Even a day-long lapse between policies can lead to higher premiums when reapplying for coverage later. The only exception is sometimes an insurer lets a driver backdate a policy and pay for the time they were uninsured. They will only do this however if there were no accidents during that time. They also typically will not do it past a certain window of elapsed time (often 30 days).

“Storage” Insurance Alternative

Instead of canceling a policy, some insurers allow their drivers to activate what is known as “storage” insurance. This is an insurance policy with comprehensive coverage, and nothing else. While a remarkably cheap option, it also means the car cannot be driven. Without liability (personal injury and property damage) coverage, the insurance only protects the vehicle against risks a parked car faces (vandalism, theft, a tree falling on it, fire, etc.).  

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