What Happens if You Can't Afford Car Insurance? Everything You Need to Know

·5 min read
Photo credit: MoMo Productions - Getty Images
Photo credit: MoMo Productions - Getty Images

If you can't afford car insurance that meets the minimum requirements in your state, you cannot drive legally. Driving without car insurance can result in significant legal consequences if you cause an accident, including thousands of dollars in fines, license suspension, and even jail time in many states. In the two states that do not require car insurance, New Hampshire and Virginia, the other driver can personally sue you if you are at fault in an accident. If you have a tight budget, however, you can look for ways to save on legal auto insurance coverage.

Compare Provider Quotes

When you're shopping for an insurance policy, shop around and get quotes from at least a few different insurance companies to find the lowest premium before you make a final decision. You will likely find dramatically different prices for similar coverage, since every insurance company uses its own algorithm to determine customer rates, according to Insurify.

The website also recommends looking into your state-sponsored insurance programs. Hawaii, California, and New Jersey all have low-income insurance coverage for qualifying drivers. You have to earn under a certain income level and you generally receive the minimum legal coverage in your state on a sliding fee scale.

Look for Available Discounts

Every insurer offers a variety of discount programs that cater to different drivers. When you get a quote, ask the agent about the discounts for which you might qualify, such as:

  • Drivers with claims-free histories can qualify for safe driver discounts.

  • Many insurers also offer a good credit discount, although some states prohibit this practice.

  • You will also find discounts for taking a defensive driving course or for maintaining good grades if you're still a student.

  • If you rarely drive, ask about a low-mileage policy at a discounted rate.

  • If you own or rent a home, bundle your homeowner's or renter's coverage with your auto insurance to save.

  • Ask about a military discount if you or a member of your immediate family previously served our country.

  • Install anti-theft devices and choose a car with antilock brakes and airbags to take advantage of safety discounts.

  • You may qualify for discounts based on your place of employment, especially if you work for the state, local or federal government.

  • Common types of affiliation discounts include price breaks for membership in sororities, fraternities, alumni associations, and other groups.

  • You could get a new vehicle discount if you drive a car that's less than three years old.

If you cannot afford auto insurance because you are a new driver with limited experience, consider sharing a policy with a parent or another responsible adult if possible.

Adjust Your Coverage Levels

Reducing the amount of auto insurance you carry to the state minimum can also help make your policy more affordable. In this situation, Policy Genius recommends selecting the lowest possible amount of liability coverage, which will get you the lowest possible rate. If you have to carry collision and comprehensive coverage because you finance or lease your vehicle, choosing a high deductible can also lower your premium cost.

WalletHub notes that you should also remove any custom coverage or riders from your policy. For example, you don't need rental car insurance if you don't tend to travel often. Although you might only save a few dollars by removing each of these items, those dollars add up over the course of a year.

Enroll in a Telematics Program

Several major auto insurance providers, including Progressive, State Farm, and Allstate, now offer telematics-based insurance. If you are a good driver, you can save based on your driving habits by installing a small device in your vehicle that tracks data such as your speed. Some of these programs also use a smartphone app to monitor behavior behind the wheel. However, if you do not show safe operation of your vehicle based on the device's parameters, you will not realize savings with this method. Parents with teens on their policy may opt for this strategy so they can get insight into how well their new driver follows the rules.

Consider Moving to a New State

Car insurance prices vary dramatically by state because of the differences in minimum coverage laws. According to WalletHub, you'll find the cheapest prices if you live in Maine, North Dakota, West Virginia, New Hampshire, Montana, South Dakota, Wyoming, Nebraska, Vermont, or Iowa. You are more likely to have unaffordable auto insurance rates if you live in New Jersey, New York, or Florida.

Trade in Your Vehicle

Some vehicles cost more to insure than others do. Policy Genius reports the average annual cost to insure common models as follows:

  • $1315 for a small sedan

  • $1232 for a medium sedan

  • $1209 for a large sedan

  • $1215 for an electric vehicle

  • $1200 for a hybrid vehicle

  • $1114 for a minivan

  • $1074 for a small SUV

  • $1102 for a medium SUV

  • $1242 for a pickup truck

When shopping for a new car, get an insurance quote for that specific vehicle before you sign on the dotted line to make sure you can afford coverage.

If you can't afford car insurance for the month, talk to your insurance company right away. Often, the insurer will give you a 30-day grace period before canceling your policy. If you have a lapse in coverage, insurance will be even more expensive. If you lease or finance your vehicle, it could be repossessed if you fail to maintain the level of auto insurance coverage agreed to in your contract.

Your agent might have options for you in this situation if you call before you fall behind on payments. Otherwise, the insurance company may turn your past-due account over to a collections agency, which will negatively impact your credit rating. If you are able to make a late payment, ask about a waiver of fees and interest, especially if you have lost your job or have other extenuating circumstances. Do not drive your car if you do not have current coverage; an accident could be financially disastrous in this situation.

Check this out if you need additional information, resources, or guidance on car insurance. https://www.caranddriver.com/car-insurance/

Sources:

https://insurify.com/blog/car-insurance/affordable-car-insurance/

https://www.policygenius.com/auto-insurance/what-to-do-if-you-cant-afford-car-insurance/

https://wallethub.com/answers/ci/cant-afford-car-insurance-2140719135/

https://www.caranddriver.com/insurance/

https://www.caranddriver.com/features/g27242492/best-pickup-trucks/

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