What To Do If You Can’t Afford Car Insurance

Key Points:

• Simply missing a car insurance payment can lead to your policy being canceled and having a lapse in coverage.
• Switching companies is one of the best ways to reduce your payment.
• You can also reduce some car insurance coverages, raise your deductible, try usage-based insurance, and more.

Those with a limited income sometimes need to make hard decisions about which bills to pay. To help make that choice, you need to know what happens when you don’t pay your car insurance.

The outcomes of missing your car insurance payments are not good. This article explains why you need auto insurance, what happens if you can’t afford your car insurance bill, and tips for reducing your premiums.

If you have trouble paying for your car insurance, you should try everything you can to reduce premiums. The first step towards a lower premium is shopping around and comparing quotes from the best car insurance providers.

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What To Do If You Can’t Afford Car Insurance

If you can’t afford car insurance, try increasing your deductible, changing companies, dropping some coverage, trying usage-based insurance, or asking about your state’s assigned risk pool. Whatever you do, don’t cancel your policy or drive uninsured.

It can be hard to find cheap auto insurance, especially for those who can least afford to pay high auto insurance rates. ZIP codes and credit histories are used to assess premiums, and these factors often work against the people who are most likely to require financial assistance.

If you can’t afford your car insurance bill, you’re certainly interested in lowering your premiums. Here are several tips that anyone can follow to get lower car insurance rates. Also try reading our article about finding cheap car insurance with no down payment.

Switch Providers

Prices can vary between companies greatly, even if you have a ticket or accident on your record. For example, our team compared rates from over 80 companies for drivers with an at-fault accident on their record. The average annual cost for full coverage was $2,854 (for a 30-year-old male with good credit and one at-fault accident). 

However, the difference between the cheapest and most expensive providers is huge. The cheapest company (American National, in this case) was $893 per year, while the most expensive (CSAA Insurance Group) was $7,045. That’s nearly 10 times as expensive.

This means you have a good chance of finding a lower rate just by comparing car insurance companies. There’s no penalty to switching insurers as long as you maintain insurance on the car without a lapse in coverage.

You can also find new rates after major life events, such as after getting married or having a baby. After moving to a new state is also a good time to explore your provider options.

Get A Higher Deductible

Your deductible is the amount you pay for a comprehensive or collision claim if you get into an accident. Raising the deductible lowers the cost of the plan. However, keep in mind that you need to pay your deductible before your insurance company will pay for repairs. If you can’t afford your auto insurance bills, however, a high deductible may be your only option.

Ask About Discounts

Almost every insurer offers some type of discounts. Common discounts include:

• Low-mileage discount
• Safe driving discount
• Military discount
• Good student discount
• Multi-policy discount
• Multi-vehicle discount

Ask your provider which discounts it offers and see if you are eligible for one it didn’t previously give you.

Try Usage-Based Or Pay-Per-Mile Insurance

Usage-based programs, like Snapshot^® from Progressive, track your driving habits and can award big discounts. Pay-per-mile programs, like Milewise^® from Allstate, charge a base monthly rate and a rate per mile.

With both of these options, you’ll get a better discount if you drive less than the average driver. If you work from home or attend online classes, you might save a good chunk of money with pay-per-mile insurance. But be sure you follow safe driving habits if you try a usage-based program. These programs track things like acceleration, braking, and late-night driving. Some companies can increase your rate or remove safe driving discounts if you get a bad score.

Take A Defensive Driving Course

Check with your provider to see if you are eligible for a premium reduction if you complete a defensive driving course. Many states have online defensive driving courses that you can take at your own pace to suit your schedule.

Reduce Your Coverage

While it is a good idea to have full-coverage auto insurance, it is not legally required in most states. If you can’t afford your car insurance bill, you can reduce your coverage to as low as the minimum state requirements.

Work On Your Credit Score

All states, except California, Hawaii, Massachusetts, and Michigan, allow car insurance companies to use credit-based insurance scores. This means drivers with good credit scores pay lower rates and vice versa. We found a poor credit score can increase full-coverage insurance rates by 84 percent for a 30-year-old male driver with a good driving record.

It won’t happen overnight, but working on your credit can bring down your insurance rates in most states.

Ask About Your State’s Assigned Risk Pool

If you’re getting high car insurance rates because of your driving record, you can reach out to an insurance agent and ask them about your state’s assigned risk pool. Through the pool, states require insurance companies to cover a percentage of high-risk drivers with more affordable rates. Otherwise, no company would cover drivers that have a certain risk level.

Insurance through an assigned risk pool can still be expensive, but it should hopefully be much cheaper than what you find on the general market. Some states might require you to have been turned away from or denied normal coverage from other insurance companies in order to apply for the assigned risk pool.

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Why Do You Need Auto Insurance?

Most states have minimum basic car insurance requirements. Breaking these laws can result in major consequences. Only two states do not have insurance requirements: Virginia and New Hampshire. However, even in Virginia and New Hampshire, you can be sued for an accident that you cause without insurance.

In addition to the fact that it’s the law, there are other good reasons to have car insurance. If you are at fault in a collision, you are vulnerable to a legal suit to pay for damages to the other person’s car and physical health. If you have a liability insurance policy, this would cover damages up to your policy limits.

Finally, car insurance is a way to protect your vehicle if you are unable to afford costly repairs out of pocket. If you need your car to commute to work, not having a car isn’t an option. Insurance ensures you can afford to replace or repair your vehicle should it go out of commission. Full-coverage auto insurance fully protects your vehicle. It includes collision and comprehensive coverage, which both pay to repair your own vehicle, while state minimum coverage doesn’t.

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What Happens If You Don’t Pay Your Car Insurance?

The penalties for not carrying insurance are different in every state, but most likely you will face fines, a suspended license, and even possible jail time. And these aren’t the only things that can happen if you don’t pay your car insurance.

When you fail to make a car insurance payment, your insurer will contact you. It may be possible to make a late payment, but this will likely come with a penalty, possibly a premium increase. You might have a grace period for up to 30 days to bring the account current.

At a certain point, the insurance company may cancel your coverage for nonpayment. If you miss your payment due date and your insurer cancels your account, it could be turned over to a collections agency.

If you have an auto loan, your lender will probably require you to have full-coverage insurance. If that coverage is dropped, your vehicle may be repossessed after a period of time. Chances are that you have a certain number of days to find new coverage before this happens. Details would be described in your loan agreement.

After you are dropped from an auto insurance policy for failure to pay, it becomes harder to find coverage again. You may not be eligible for coverage with your original provider, and the lapse in coverage will be noted on your record. This can mean increased premiums wherever you shop for car insurance, making it even harder to afford your next car insurance bill.

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Consider Transportation Alternatives

If you can’t afford car insurance, there may be other things you can do instead of owning your own car. City dwellers can take advantage of car sharing and ride hailing apps if they travel infrequently. Elsewhere, you might be able to bundle multiple vehicles to save money if you share an address with family or even roommates. If you can use someone else’s car regularly, you can get non-owners car insurance. This is usually cheaper than insurance for your own car.

The important thing to know is that a registered vehicle needs car insurance coverage. You can only cancel your insurance if you also cancel your registration and store the vehicle off of public roadways (including neighborhood streets).

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What To Do If You Can’t Afford Car Insurance: Our Take

Missing a car insurance payment can bring consequences like late charges and even a lapse in coverage. If you can’t afford your car insurance, compare other companies right away. You can also look for discounts, try usage-based insurance, raise your deductible, or drop some coverage.

Our Recommendations For Car Insurance

Switching providers is one of the best ways to find a cheaper insurance rate. Different providers offer different rates and discounts, and you won’t know which is best for you until you compare quotes for auto insurance. We recommend checking out Geico and Progressive.

Geico: Best For Basic Coverage

Geico is our highest-rated provider that is available to everyone. We give it 4.5 out of 5.0 stars because of its high customer satisfaction scores and low average premiums. Geico is the third-largest insurance corporation in the U.S. It has an AM Best financial strength rating of A++ and a Better Business Bureau (BBB) rating of A-.

Geico offers the following discounts:

• Good student discount
• Defensive driver discount
• Discounts for airbags, anti-lock brakes, and anti-theft devices
• Federal employee discount
• Military discount
• Good driver discount
• Multiple policy discount
• Multiple vehicle discount

Consider a Geico auto insurance policy if you think one or more discounts may apply to you. To learn more, read our full Geico review.

Progressive: Best For Usage-Based Insurance

We also rate Progressive at 4.5 stars out of 5.0. Progressive has some useful tools including a price comparison tool that can get you rates from multiple companies. Progressive’s Snapshot program is also known to offer good discounts, especially for people who drive less than average.

Depending on the discounts for which you are eligible, you might find cheap rates here. Discounts offered by Progressive include:

• Good student discount
• Multiple vehicle discount
• Multiple policy discount
• Anti-theft device discount
• Homeowner discount
• Continuous coverage discount

To learn more, read our full Progressive insurance review.

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Can’t Afford Auto Insurance: FAQ

Below are a few frequently asked questions about affording car insurance:

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How We Rate Auto Insurers

Our review team extensively researches auto insurance providers to deliver informed and unbiased assessments of leading companies. We evaluate several key rating factors that are important to consumers to determine which providers are the best in the industry:

• Reliability: It’s important that an auto insurer is able to meet its claims obligations. Companies with a strong financial strength rating from AM Best score best in this category. Established insurers with a long history of reliable service also receive positive marks.
• Availability: Insurance companies that offer wider availability to consumers in terms of state availability and few eligibility requirements are more likely to meet consumer needs.
• Coverage: To determine our coverage score, we look at the number of coverage options available as well as coverage limits and deductible options. Our ratings also take into account additional services and benefits like roadside assistance.
• Pricing: Cost can be difficult to compare between insurers because so many factors impact annual premiums. The cheapest insurer for one driver may not be the cheapest for another. To determine our cost score, we look at insurance rate estimates generated by Quadrant Information Services, discount opportunities, and consumer reports.
• Service: We comb through customer reviews on sites like the Better Business Bureau (BBB) to learn about customer experiences. Insurers with a low volume of complaints score well in this area. We also consider the claims process, giving higher ratings to car insurance providers that offer a smooth experience.
• Technology: Providers with an online quote tool, easy-to-use claims app and a usage-based insurance app score best in this category.

*Data accurate at time of publication.

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