We understand how frustrating it is when you need to drive to work and earn money, yet you can no longer afford your auto insurance. Let us help you examine your situation and see if there are ways you can maintain your policy.
What Happens If You Do Not Pay Your Premium
Although insurance providers have the right to cancel your payment even if you miss paying your premium by the day, they tend to have a grace period for people who are late on their payment. Note that if you pay your fee late, there will be a late fee applied to the cost. But once your second payment is due and you fail to catch up, they will definitely begin the process of canceling your policy. However, the good news is that they are legally required to notify you of the issue in writing and allow you enough time to rectify the problem. But once you fail to submit a payment before the final deadline, you are officially uninsured. Unfortunately, this does not end here. Your insurer will then notify the DMV of your changed status. The DMV will also allow you a certain time to get a new policy or provide an explanation of the status (e.g. sometimes people forget to transfer the title after selling their automobiles). If they do not hear from you or your new provider, they will revoke your vehicle registration and tags, and sometimes even suspend your license.
If you realize that you have to have financial difficulty meeting the payments, call the customer service right away and speak to an agent. Tell them of your situation and how much you can afford in your current situation. These agents are here to help and there may be ways they can whittle down your plan to a bare minimum and allow you to keep your policy at a lower price. Do not let the situation roll into a bigger snowball because sooner you drop the unnecessary coverage, the sooner you can pay less as your rate are calculated by the day and are pro-rated.
Try Your Best Not to Drop Your Coverage
Dropping your policy may shortly save you some money, but it will cause a lapse in your coverage history. During this time, you still need to properly store your automobile and purchase a storage protection plan in case it is vandalized or stolen (unless you sell the automobile as well). The worst thing about this solution is once you want to apply for another policy in the future, the lapse in coverage will indicate you as a higher risk driver. Consequently, your cost will be much higher.
Backdating Plan: The Gray Area
If your policy gets dropped, many companies will give you a second chance to reactivate your policy within 30 days of the cancellation as long as you are willing to pay for the duration that you lapsed. This is called "backdating". In usual cases, backdating is illegal. BUT if you are backdating because you are paying back for the lapse to reactivate your old coverage, then this is regarded as legal. In order to complete this process, you must sign a form to verify that you were not involved in an accident during the lapse.
Do Not Attempt to Drive Without Coverage
According to the government, driving is a privilege and not a necessity. Sadly, it is an essential need for many people who live in areas that are more rural and rely on driving as the only means of transportation. With the exception of New Hampshire, all states require drivers to carry some form of assurance or financial proof in order to enjoy this freedom. If you get pulled over by the law enforcement and cannot provide any proof, you will be subjected to a violation ticket. Depending on your residing state, the violation can cost between $100 to $1,500. If you think about it, $1,500 can equal to your annual premium. Unless you can show proof of financial responsibility within the 24-hour timeframe, your license will be suspended until you can provide evidence that you have some sort of minimal protection as stated by the regulations. In addition, your automobile registration may also be suspended, or worse, impounded. If you do not know what the impounding lot works, every day your vehicle is charged an expensive fee. This whole ordeal of trying to save a few dollars can actually land you in even more financial turmoil. Moreover, when you can start affording policy again, you may need to jump through your state's requirements before any providers accept your application. In the worst case scenario, you will need to submit an SR-22 form. Once this is attached to your profile, you will find that some companies will deny you for no reason. Others will charge you a considerably more expensive plan for the next 3 to 5 years depending on your credit history and driving record. So whatever you do, do not attempt to drive without coverage.
What Can I Do to Cut Down My Premium?
This question hinges on whether you own outright the vehicle or you are currently put on an installment leasing payment plan:
If you own the vehicle outright, the good news is that you can cut your rate down to the minimum requirement according to your state's regulation.
If you are currently leasing a car, you may not have this option as the lender requires you to purchase both collision and comprehensive coverage along with the minimum liability protection.
- If you can, try to buy it outright.
- If this option is not viable, negotiate with your lender and try to work out a new installment plan with the longer term but lower monthly payments. If you have been good with keeping up with the payments, they may take your offer.
- If they will not budge on renegotiation, do not worry. There are still ways that can help you keep your coverage and vehicle. Check out the Tips on Keeping Your Insurance to see how you can still afford a policy plan.
- Another extreme option is selling your leased and buying an older used one for the time being. In reality, if you cannot afford your plan, you are more than likely struggling with your car payments as well. By taking this approach, you can lower your monthly overhead from the leasing payment and still have something to drive to work. The great news is that an older one is much more affordable to insure. Depending on your choice and budget, a decently used automobile with the clean title may only cost $30 as the monthly rate. Read on for tips on buying the right vehicle to get the lowest premium.
Tips on Keeping Your Policy
Once you realize you are struggling with your payment, do not wait and see if your situation will resolve itself. Act right away so you can stop paying your current price today (you can sometimes even prorate your current monthly payment and forward the refund as part of next month's payment). Here are some tips that can help you:
- Strip down to the minimum. You will be amazed how affordable the plan becomes. Discuss with an agent about dropping all unnecessary options. If yours is relatively old and the market value has significantly depreciated, you should highly consider dropping comprehensive and collision options. Although it is not ideal to have the most minimal basic coverage, it can be an effective short term solution until you can resolve your financial situation.
- Raise your deductible. If you increase your deductible, you can see a significant drop in your premium. Be careful with this option. If you do get into an accident, remember that you will have to pay out-of-your-pocket for that amount before your policy kicks in and starting paying for the rest of your damage.
- Drop all other household drivers from your plan. Assign yourself as the designated driver for the time being. This can save you some money as your provider see it as a lower risk profile.
- Have your wife be the primary policy holder. Women drivers tend to receive lower quotes than men when it comes to premium. On average, women pay 12% less than men.
- Ask for any promotion and discounts possible. Just by taking some defensive driving course can already drop your rate by 5-10% depending on your insurer's policy. Another quick discount is to install anti-theft devices and alert your company of your proactive responsible owner diligence. This trick can earn you another 5-10% discount on your plan. Other easy discounts are paperless statement discounts, good student discounts, company-switching discount, good driver discount, and auto-payment discount. Sometimes owning an account or credit card from a certain bank can also earn you an affiliation discount.
- Shop around for better rates from another provider. There are certain companies that work with low-income household.
- Consider "pay-as-you-drive" option and drive less See if this can lower your cost. If you want to minimize your driving quota, you may want to even start carpooling with your coworkers or join a carpooling program.
- Drive less. Decreasing your annual traveling mileage can significantly decrease your rate. . Some carriers offer will also offer low rate plans for individuals who only drive short distances or occasionally.
- Consider getting a black box or tracking device from your insurer to track your driving behavior. Some companies offer the incentive of lowering your rate if you volunteer to be their study subject. And if you drive responsibly and exhibit great defensive skills, they will even reward you with further rebate or cash prizes.
- Check to see if your state has public option coverage. Some states offer very affordable plans for low-income households. Call your local DMV to see if your city has similar programs or financial programs for individuals who are in your current situation.
- Get married. Being married or claiming domestic partnership status has its perks, you get the better tax rebate and you are viewed as more responsible adults according to carriers. Just by being married can score you a much lower rate.
- Search for low-income car coverage. There are smaller, lesser known companies that cater to low-income families. Here is a list of these insurers:
- - Progressive
- - GMAC
- - Infinity
- - Bristol West
- - Eastwood Insurance
- - Western General
- - Carnegie General
- - Western United
- - Access General
- Search for local low-income car policy. Each state tends to have their own locally own insurers that are willing to offer very affordable plans for households who are struggling with their financial situation.
Is There Federal Coverage for Low-Income Households?
Although some states have realized driving as a necessity in life and have started to offer low-cost sponsored coverage to low-income households, there is no federal funding program to help the rest of the country. For those fortunate states drivers, these low-cost coverage are called public auto insurance (they are also known as government car insurance). They are available in:
- California
- Maryland
- New Jersey
- Hawaii
- Michigan
California's Low Cost Automobile Insurance Program (CLCA)
To quality, you must:
- Maintain good driving history
- Minimum age requirement is 19 years of age
- Own a current effective driver's permit
- Own a vehicle that is has a market value of $20,000 maximum and does not have any unpaid loans attached
- Your maximum income must be less than:
- - 1 person household - $29,700
- - 2 people household - $40,050
- - 3 people household - $50,400
- - 4 people household - $60,750
If you qualify for CLCA, the maximum annual premium ranges from $241 to $556 depending on your situation. Please note that you can apply for a discount if you have been a licensed drivers with at least 3 years of great driving record.
The coverage will include:
- $3,000 coverage on property damage
- $10,000 coverage on bodily injury and/or per person's death
- $20,000 coverage on bodily injury and/or death
For more information on the CLCA program or complete the online application, please visit mylowcostauto.com. If you do not have internet or require further assistance, please call the information hotline at 1-866-602-8861 or toll free 877-401-9550.
New Jersey's Special Automobile Insurance Policy
The New Jersey low-income auto protection program is called Special Automobile Insurance Policy (SAIP). Unlike California, you can request for SAIP via most underwriting agencies in New Jersey.
In order to be qualified for SAIP, these criteria must be met:
- Must be currently registered in Medicaid.
- Currently hold a valid driver's permit.
Your SAIP annual premium will cost differently depends on your payment method:
- $360 annually if you submit in 1 single payment.
- $365 annually if you submit in 2 portions for every 6 months throughout the year.
SAIP includes your emergency medical treatment fee that is associated with the accident. It will also cover any treatment fee and rehabilitation fee associated with severe neural or vertebral injuries with a maximum payout amount of $250,000. However, it does not offer you with any liability coverage or medical related expenses that are already taken care of by Medicaid of New Jersey. The good thing about this program is that even if you are no longer qualified for Medicaid New Jersey during your subscription to SAIP, you may retain the current coverage until it expires. Note that afterward, you are not qualified to renew your SAIP policy and will require purchasing a plan from private marketplace insurers.
For additional information on how to purchase a SAIP plan, you can search for an SAIP provider here at the New Jersey Banking and Insurance Department official website or call 1-800-652-2471.
Hawaii's Disability Auto Coverage Program (AABD)
Based on the state rule, free liability and personal injury coverage will be rewarded to any motorist or permanently disabled individual who are not able to drive and are currently receiving public assistance related to direct cash disbursements. The state also provides free coverage to residents who are currently receiving financial assistance from the Aid to Aged, Blind, and Disabled (AABD) program. In order to qualify for their AABD financial assistance, you must meet these requirements:
- You must be 65 years or older
Or you must meet 1 of these listed criteria as listed below:
- You are legally blind
- You are currently suffering from physical and/or mental disability for a minimum of 12 months, and the condition is preventing you from maintaining a job.
- You are currently having a terminal medical condition that is preventing you from acquiring and maintaining a job.
- You are currently having a terminal medical condition where your social security funding or supplemental security income does not provide sufficient financial support for you to purchase a policy.
- You are currently living with someone who is currently receiving AABD financial assistance and you are taking care of their needs.
If you are qualified for the Hawaii low-cost disability auto coverage program, your coverage will be free of charge. You can apply by visiting the Hawaii Department of Human Services official webiste, or by calling 808-586-4892.
For more information, contact the Hawaii Department of Commerce and Consumer Affairs.
Maryland Auto Insurance (Used to be Known as Maryland Public Insurance Program MAIF)
For Maryland residents, you also have the option apply for their low-income auto insurance program – the Maryland Auto Insurance. Established in 1972, this assistance program offers low household income Maryland residents with affordable liability cover. This policy offers:
- At least $20,000 per person bodily
- At least $15,000 in property damage
In order to qualify for the program, you must meet these requirements:
The State of Maryland provides interested applicants with a quote at the Maryland Auto Insurance official website. If you do not have internet access, you may contact their information hotline at 800-492-7120.
Michigan Affordable Insurance Placement Facility (MAIPF)
Having a very different system than the rest of the country, Michigan requires all residents to purchase property protection, personal injury coverage, and residual bodily injury and property damage liability protection. If you want to find out more about the program and how you can apply for a policy, please visit their official MAIPF website for more information. If you do not have the internet, you may also contact their hotline at 737-464-1100.
Swapping for a Lower Premium Used Vehicle
As you have found out by now, different brands and types of automobiles have a certain reputation. Trucks tend to be bigger and can do more damage on the road. Cops are often faster in speed and driven by younger adults. These automobiles tend to be higher risk according to carriers' surveys. Consequently, they cost more to insure. Having said that, there are exceptions to the rule. For example, CrewMax Cab trucks are usually owned by middle-aged responsible drivers. This reason makes this type of automobile much lower risk than other types of vehicles.
| Car Types with Lowest Average Annual Premium Cost | ||
|---|---|---|
| Rank | Car Type | Average Annual Premium Cost |
| 11 | Coupe | $1,909 |
| 10 | Crew Cab | $1,907 |
| 9 | Convertible | $1,892 |
| 8 | SUV | $1,826 |
| 7 | Sedan | $1,823 |
| 6 | Minivan | $1,810 |
| 5 | King Cab | $1,801 |
| 4 | Double Cab | $1,781 |
| 3 | Hatchback | $1,771 |
| 2 | Station Wagon | $1,703 |
| 1 | CrewMax Cab | $1,680 |
Same goes for certain brands as well. If you want to get the lowest rate possible, here is a chart of the cars that hold the cheapest premium.
| Vehicle Brands With Lowest Average Premium Annual Cost | ||
|---|---|---|
| Rank | Brand | Average Annual Premium Cost |
| 18 | Acura | $1,933 |
| 17 | Buick | $1,915 |
| 16 | BMW | $1,908 |
| 15 | Chevrolet | $1,902 |
| 14 | Honda | $1,899 |
| 13 | GMC | $1,897 |
| 12 | Chrysler | $1,893 |
| 11 | Ford | $1,892 |
| 10 | Dodge | $1,877 |
| 9 | Hyundai | $1,801 |
| 8 | Mercedes Benz | $1,801 |
| 7 | Nissan | $1,763 |
| 6 | Subaru | $1,761 |
| 5 | Jeep | $1,752 |
| 4 | Toyota | $1,752 |
| 3 | Mazda | $1,712 |
| 2 | Kia | $1,706 |
| 1 | Volkswagen | $1,695 |
After balancing with the average car value and the 2016 accident surveys, Toyota Tundra ends up being the most affordable car to insure even though it is a large size truck. Adding Toyota, its dependability, and CrewMax Cab into the equation, it easily becomes the best-used car to purchase on the market.
| 2017 Most Affordable Automobile to Purchase | ||||
|---|---|---|---|---|
| Rank | Brand | Type | Average Value | Average Premium |
| 1 | Toyota Tundra | CrewMax Cab | $35,617 | $1,680 |
| 2 | Mazda CX-5 | SUV | $21,022 | $1,695 |
| 3 | Volkswagen Golf | Hatchback | $17,614 | $1,695 |
| 4 | Kia Optima | Sedan | $20,195 | $1,703 |
| 5 | Kia Sorento | SUV | $25,087 | $1,703 |
| 6 | Kia Sportage | SUV | $21,060 | $1,703 |
| 7 | Kia Soul | Wagon | $14,305 | $1,703 |
| 8 | Jeep Compass | SUV | $17,288 | $1,710 |
| 9 | Volkswagen Jetta | Sedan | $17,167 | $1,711 |
| 10 | Jeep Patriot | SUV | $15,728 | $1,715 |
| 11 | Kia Forte | Sedan | $13,541 | $1,717 |
| 12 | Volkswagen Passat | Sedan | $16,959 | $1,718 |
| 13 | Toyota Sienna | Minivan | $29,370 | $1,720 |
| 14 | Jeep Wrangler | SUV | $29,319 | $1,721 |
| 15 | Toyota Camry | Sedan | $20,922 | $1,722 |
| 16 | Mazda 3 | Sedan | $17,929 | $1,728 |
| 17 | Toyota Corolla | Sedan | $15,729 | $1,734 |
| 18 | Nissan Pathfinder | SUV | $30,625 | $1,737 |
| 19 | Nissan Rogue | SUV | $20,797 | $1,738 |
| 20 | Toyota Prius | Hatchback | $16,181 | $1,738 |
| 21 | Nissan Murano | SUV | $29,011 | $1,745 |
| 22 | Subaru Impreza | Hatchback | $17,907 | $1,749 |
| 23 | Nissan Versa | Sedan | $10,818 | $1,750 |
| 24 | Subaru Forester | SUV | $21,631 | $1,760 |
| 25 | Subaru Legacy | Sedan | $20,342 | $1,764 |
| 26 | Nissan Sentra | Sedan | $14,468 | $1,765 |
| 27 | Toyota Highlander | SUV | $33,834 | $1,768 |
| 28 | Subaru Outback | SUV | $25,165 | $1,771 |
| 29 | Toyota Tacoma | Double Cab | $25,064 | $1,791 |
| 30 | Mercedes-Benz C-Class | Sedan | $36,256 | $1,801 |
| 31 | Nissan Frontier | King Cab | $22,476 | $1,801 |
| 32 | Nissan Altima | Sedan | $19,922 | $1,807 |
| 33 | Hyundai Tucson | SUV | $19,710 | $1,833 |
| 34 | Chevrolet Traverse | SUV | $28,160 | $1,886 |
| 35 | Chevrolet Trax | SUV | $10,340 | $1,886 |
| 36 | Chrysler 200 | Sedan | $16,815 | $1,886 |
| 37 | Dodge Challenger | Coupe | $30,579 | $1,886 |
| 38 | Dodge Charger | Sedan | $32,957 | $1,886 |
| 39 | Dodge Dart | Sedan | $13,252 | $1,886 |
| 40 | Dodge Durango | SUV | $31,790 | $1,886 |
| 41 | Ford Expedition | SUV | $36,099 | $1,886 |
| 42 | Ford Focus | Sedan | $14,370 | $1,887 |
| 43 | Ford Explorer | SUV | $28,735 | $1,891 |
| 44 | Ford Mustang | Convertible | $29,497 | $1,892 |
| 45 | Ford Taurus | Sedan | $22,690 | $1,892 |
| 46 | Honda Civic | Sedan | $19,807 | $1,892 |
| 47 | Honda CR-V | SUV | $24,060 | $1,892 |
| 48 | Chevrolet Tahoe | SUV | $47,126 | $1,892 |
| 49 | Dodge Journey | SUV | $20,559 | $1,892 |
| 50 | GMC Terrain | SUV | $23,922 | $1,892 |
| 51 | Chevrolet Impala | Sedan | $24,253 | $1,893 |
| 52 | Ford Edge | SUV | $26,228 | $1,893 |
| 53 | Chevrolet Equinox | SUV | $22,627 | $1,899 |
| 54 | Honda Odyssey | Minivan | $27,695 | $1,899 |
| 55 | Chrysler 300 | Sedan | $25,625 | $1,900 |
| 56 | Honda Accord | Sedan | $21,493 | $1,900 |
| 57 | Hyundai Accent | Hatchback | $11,340 | $1,901 |
| 58 | GMC Acadia | SUV | $34,706 | $1,901 |
| 59 | Chevrolet Malibu | Sedan | $15,472 | $1,901 |
| 60 | Hyundai Elantra | Sedan | $15,997 | $1,902 |
| 61 | Honda Pilot | SUV | $31,239 | $1,902 |
| 62 | Chevrolet Colorado | Crew Cab | $26,890 | $1,907 |
| 63 | BMW 3-Series | Sedan | $32,277 | $1,908 |
| 64 | Chevrolet Cruze | Sedan | $14,875 | $1,909 |
| 65 | Chevrolet Sonic | Hatchback | $12,715 | $1,909 |
| 66 | Honda Fit | Hatchback | $15,229 | $1,910 |
| 67 | Buick Encore | SUV | $20,033 | $1,915 |
| 68 | Ford Fiesta | Sedan | $12,308 | $1,916 |
| 69 | Jeep Cherokee | SUV | $21,272 | $1,919 |
| 70 | Acura MDX | SUV | $39,411 | $1,933 |
What Happens If My Premium Is Still Too Expensive?
If you have exhausted all possibilities to lower your cost, perhaps you should look towards other means of transportations. If you hate public transportation, there are other options to consider. Here are some possible suggestions:
1) Ask if your co-workers or neighbors would like to carpool with you in exchange for paying gas or favors.
2) Join an online carpool system. Many cities have both government funded programs and private programs to lower air pollution and bridge the gap where public transportation fails. The great thing about these programs is that you do not need to drive at all. That means more time for you to sneak in another nap, read a book, or catch up on your favorite TV shows. And in doing so, you can save some more money, help out the environment, and even know some more new friends.
3) Get an electric bicycle. These days, these hybrid bicycles can travel as fast as a scooter or motorcycle. If you live in dense traffic areas, they can actually be your best way to commute to work or grocery shopping. It is another great way to save some money and help out the environment. What is awesome about the electric bicycle is that you can also get some exercise in every day. Now you have no reason for skipping out on working out. If you do decide on this option, remember to check with your local state regulation concerning the speed allowed. For example, in California, you can ride your electric bicycle in the bike lane if it is under a 20MPH. If it travels faster than that speed, you are required to share the motorcycle lane or specialized protected lane.
4) Relocate closer to work. Moving closer to where you work can save you both money and time. You no longer need to be stuck in traffic. On average, most people spend about 2 hours in traffic on a daily basis. Imagine what you can do with these extra 2 hours.
Conclusion
We sincerely hope that our article has provided you with some useful information on how to make your plan more affordable so that you can continue using your vehicle for all your needs. Please note that at any point you have any concerns about your coverage, do not let it slide. By being proactive and reach out to an agent, you will be surprised that there are many solutions to your problem. It is only if you wait that fewer options will be available to you. So act right away and start saving today. If you have any personal tips and stories you wish to share with our fellow readers, please leave us a comment. We will be more than delighted to hear from all of you.