Best Car Insurance for Low Income Families

Finding cheap car insurance is an inexact science — insurance companies feed many assumptions into their quote-making machines and the same customer information can return a wide range of quotes from different insurers. In most cases, the best insurance for low-income families is really more of a strategy of doing research and telling insurers exactly what you want and need for your auto insurance coverage.

Insurance Cost Factors
Many factors come in to play when insurance companies choose rates for customers. Rates vary based on age, driving experience, gender, driving record, annual mileage and type of car driven. Some of these factors are unchangeable, but others may improve over time. If you have any traffic violation points on your record, they typically stay for three years. After three years, get new insurance quotes to take advantage of your improved driving record. If possible, try to work close to home to reduce your commute.

What some people do not know is that insurers are now looking at your credit score as well when preparing your quote. Apparently, statistics show that people with poor credit histories tend to have more accidents. As long as you make credit payments on time, your insurance should not be affected. Additionally, some people must pay much higher premiums because they live in areas that experience high vandalism and theft rates. If this is the case, get a few quotes from insurers that provide high-risk coverage — you may find they can help get you lower rates than companies that write mostly standard policies.

Tailoring Your Insurance Coverage
Start cutting down your premiums by increasing the amount of your deductible. This means you will have to have some cash set aside in case you get into an accident, but it saves a lot of money each month on premiums. If you drive an older car that is paid off, you can drop the comprehensive and collision coverage. It may cost more to keep this coverage over time than the value of your car.

If your car is financed, however, you will be required to maintain comprehensive and collision insurance until the car is paid off. You may want to consider selling a car that is not paid off and buying an older model that is reliable and cheaper to insure. When shopping around for quotes, work with an agent that takes the time to explain everything, answer all of your questions, and work through various quote scenarios that get you the lowest rates possible. If you feel the agent is irritated or not helpful, it’s time to find someone else.

Mandatory Car Insurance
Car insurance is mandatory in all 50 states, and for good reason. It’s bad enough if someone hits your car, through no fault of your own. But if they leave you with repair and medical bills because they don’t have insurance that could be devastating. California understands that many drivers have stretched budgets and cannot afford auto insurance. The state has developed a low cost automobile insurance program to help low income residents afford insurance. The program offers only liability coverage with low limits, which might not fully protect you.

However, the insurance does keep you within legal requirements for carrying insurance. Applicants must have good driving records, own a car worth no more than $20,000 and meet certain income requirements. Nevada is implementing a similar test program in 2011 to help its residents keep their insurance. Check with your state’s Department of Insurance to see if something similar is offered in your area.

No Loyalty
A recently published article cited a study of insurance company advertising mailers. It said that customers that demonstrated loyalty by remaining with their insurance company for years were being overcharged. Rates offered on advertising mailers were found to be about 10 percent lower than rates paid by long-time customers. This is a perfect example of why it is important to get insurance quotes every six months to check for lower rates.

Insurance companies offer a ton of discounts, but they do not tell you about all of them unless you ask. Take note of the discounts that apply to your situation and ask insurers for them. Here is a list of some possible discounts available:

– Low mileage discount
– Good driver discount
– Anti-theft devices (alarms, lojack)
– Combining auto with homeowners
– College students away at school
– Defensive driving courses
– Good credit
– More than one car on a policy
– Three years with no accidents or moving violations
– Student drivers with a “B” grade average or higher

Alternative Plans
Instead of going directly to an insurance company, look for lower rates as part of a group auto insurance plan. Ask around at work or any clubs, associations or other groups to which you belong. Another insurance plan worth investigating is the pay-as-you-drive plan. Progressive Insurance and GMAC both offer variations of this program.

Progressive monitors your miles driven with the help of a device installed in your car. GMAC has partnered with OnStar, so any car with OnStar installed can work with the GMAC insurance program. This might not be a money saver for people who drive a lot, but makes sense for those with lower mileage needs.

One of the most important steps in finding the lowest-cost insurance for you and your family is to shop around and get as many quotes as possible — from at least three different companies. Get started by using our free quote system to receive quotes from several insurance companies licensed to do business in your state.

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