Auto Insurance for Welfare Recipients

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Important facts to know...

  • If you’re receiving state aid, it won’t have any affect on your auto insurance rates or eligibility
  • Your income can’t be used to determine how much you’ll pay for insurance because it’s a discriminatory practice
  • In most states, insurance companies are free to use a credit-based score as a rating factor when setting your rates
  • If you’re trying to keep your premiums low, take advantage of discounts instead of removing layers of protection
  • Some states have low-income insurance programs for drivers who can’t find affordable coverage elsewhere

Auto insurance is a state-wide requirement. It doesn’t matter what type of vehicle you drive or how much money you have to your name, if you own a vehicle that’s registered in your name, you have to insure it.

Unfortunately, if you qualify for welfare benefits because you fall into a low-income class, affording auto insurance premiums can prove to be difficult. While it’s hard to manage the expense, it’s both necessary and mandatory.

If you currently receive state or federal aid, you need to make every dollar that you earn through your employer count. That means that finding low-cost auto insurance should be on your list of priorities.

Enter your zip code above to compare car insurance rates and find the best deal.

As you’re shopping around, here’s a guide to help you find the best deal on coverage for your personal car:

Are you eligible for auto insurance when you receive welfare?

You aren’t automatically eligible for auto insurance. Before you can buy coverage, you’ll have to answer some specific questions to determine if you meet the carrier’s eligibility requirements.

While some companies have more strict guidelines than others, the basic requirements are the same all across the industry.

No state allows an insurance company to ask if an applicant is receiving any type of aid when they are rating a policy. In fact, the carrier can’t ask how much the driver makes or use household income to categorize risk.

The main factors that will be used to determine if you’ll qualify for a standard policy include:

  • The named insured must have an insurable interest in the covered vehicle
  • The named insured must have a valid driver’s license
  • The applicant must have a physical address in the state where the vehicle is registered

Do you have to buy auto insurance if you’re a welfare recipient?

Auto insurance is one of the few types of insurance protection that you’re required to carry under state law. If you have a vehicle that’s registered and titled in your name, you have to insure it as long as auto insurance is mandatory.

The state doesn’t erase the mandatory requirement for drivers just because they fall into a low-income bracket. If you don’t buy a minimum amount of insurance on your car, as prescribed by state law, you will be penalized.

Not only will you pay penalties, choosing to drive your uninsured vehicle could leave you with no vehicle at all.

What type of auto insurance is required?

Auto insurance requirements are set by state insurance officials. The officials will review claims data and other statistics to determine how much auto insurance coverage is appropriate.

There are states with higher requirements than others, but typically the mandatory coverage limits are fairly low.

You can expect to be required to carry at least third-party liability coverage. Liability coverage will pay for third-party damages when you’re liable for the loss. It consists of Bodily Injury Liability and Property Damage Liability.

In states where fault doesn’t dictate which insurer pays, you’ll have to carry no-fault Personal Injury Protection as well.

Can having bad credit affect your insurance rates?

If you have bad credit, you’re not alone. According to studies conducted by Experian, around 30 percent of Americans have poor credit.

People with scores between 500 and 600 not only find themselves paying subprime interest rates, they also face paying more for their auto insurance.

States like California and Massachusetts don’t allow insurance companies to use credit as a loss predictor. All other states do permit and strongly support the use of credit-based insurance scoring.

The idea is that people with poor credit are more likely to file claims. While it does feel discriminatory, actuaries have a lot of data to support the claim.

Will your occupation and employment status be used?

There’s a huge misconception that people who receive welfare benefits don’t work. This couldn’t be further from the truth. In fact, the number of working families on welfare is on the rise.

Statistics show that only 13 percent of recipients have no working adult in the home. If you’re working, your occupation will affect your rates.

Your profession can have a direct impact on your rates because of how it affects your driving habits. If you’re a journalist or you work in entertainment, you’re highly exposed to losses because of how often you drive and where you’re driving.

If you’re a teacher, a nurse, or a pilot, you’re believed to be a safer driver who is less likely to have an accident. Find out how your profession is rated. If you’re unemployed or retired, you could receive a low-risk rate.

Look For As Many Discounts As You Can

Auto insurance rates are unique. Each time you get a quote, the quote that you solicit is drawn up just for you. It’s your personal information that’s used to calculate your own rate and the rate isn’t universal. Discounts for your coverage also aren’t universal.

When you’re looking for a value-priced rate, one effective way to find a deal is to search for discounts. You won’t be eligible for all of the discounts a company offers, but you can definitely stack the discounts on top of each other for the most affordable plan.

Here are some insurance discounts to look for:

  • Multi-car
  • Multi-line
  • Alarm
  • Good credit
  • Prior insurance
  • Loyalty
  • Good driver
  • Accident-free
  • Claims-free
  • Good student

If you can’t afford to buy a traditional insurance, you can look for coverage through a government-sponsored car insurance provider that sells to low-income families.

Before you turn to a government program to get insurance, get a handful of quotes through standard insurers. Use our online rate comparison tool to see if you can afford car insurance through a standard provider.

Once you have all of the quotes, you’ll be ready to make a decision.

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