What to Do if you Can't Afford Car Insurance

Car insurance can be expensive in states like Michigan, Florida, or Colorado. Various factors influence your insurance costs, including age, driving history, vehicle type, credit score, annual mileage, and more.

It's completely understandable if you find yourself out of budget and struggling to pay for car insurance. Fortunately, there are a few things in your hand to lower your auto insurance rates if you're facing financial difficulties.

Whether you have an existing auto policy that you can't pay this month or have received quotes that are out of your budget, our tips can help in both situations.

First, let us remind you that skipping coverage isn't an option. Driving without insurance can lead to license suspension, hefty fees, or even a lawsuit in the event of an accident. Instead, smart strategies such as comparing quotes, adjusting coverage, contacting your insurer or agent, or switching to pay-per-mile plans can help you get cheaper car insurance.

Keep reading to learn 15 ways to afford car insurance and what to do if you can't pay. Whether you have a financed vehicle, face negative equity, or worry about repossession, we've got answers for you.

15 Things to Do If You Can’t Afford Car Insurance

Wondering what to do if you can’t afford auto insurance? Here, we'll discuss 14 smart approaches to handle this situation. If you're unable to pay your premium this month or the estimates for a new auto insurance policy don't fit your budget, these tips can help you find better and cheaper car insurance solutions.

Here are the 15 things to do If you can’t afford car insurance:  

1. Contact Your Insurance Company First
2. Always Compare Quotes
3. Raise Your Deductibles
4. Look for Low Down Payment Insurance
5. Look for Car Insurance Discounts
6. Adjust Your Payment Due Date
7. Reduce Coverage
8. Change Your Vehicle
9. Ask Your Agent About Reinstatement
10. Switching to Pay-Per-Mile Insurance
11. Improving Your Credit Score
12. Budgeting and Cutting Unnecessary Expenses
13. Check State-Funded Insurance Programs
14. Use Public Transport
15. Exploring Non-Owner Car Insurance

1. Contact Your Insurance Company First

If you already have an auto insurance policy but can’t afford this month’s insurance premiums, don’t ignore it. Contact your insurance company immediately. Many insurance companies offer grace periods, flexible payment plans, or even temporary policy adjustments.

However, if you’re searching for a new car insurance policy, but struggling with costs, ask about discounts, bundling options, or lower coverage. Some insurers may adjust estimated quotes based on your budget. If you have a financed vehicle, talk to your lender. They may provide suggestions as well if you are out of your budget and can’t pay for the required car insurance coverage. This may also help you avoid repossession.

Keep in mind that communicating honestly with your insurer can help you get out of these financial headaches.

2. Always Compare Quotes

Another important step if your budget is tight and you can’t pay the insurance quote you received is to shop around. When purchasing auto insurance, it's crucial to remember never to settle for the first quote you get.

Comparing quotes from multiple insurance companies can help you find cheaper car insurance. Rates vary based on factors like your credit score, driving history, and vehicle type.

There are online comparison websites and tools that let you check auto insurance rates side by side. You can use websites like The Zebra, or compare.com to get free car insurance quotes from different insurers and compare their rates and coverage options. You can save hundreds of dollars just by comparing quotes.

Some companies also offer pay-per-mile policies, which could be cost-effective if you drive less. Even if you already have car insurance, it’s wise to shop around when your policy is up for renewal.

3. Raise Your Deductibles

One of the quickest ways to lower your insurance premium is by raising your deductibles. A higher deductible means you’ll pay more out of pocket if you file a claim. It’s worth raising as you’ll pay significantly reduced auto insurance rates.

But before increasing your deductible, make sure you have enough savings to cover it in case of an accident. If your vehicle has negative equity or is financed, check with your lender to ensure this change won’t affect loan terms. The best approach is balancing a higher deductible with a lower car insurance rate that fits your budget.

4. Look for Low Down Payment Insurance

In case you’re struggling with a large down payment, search for insurance companies that offer low down payment insurance. You can manage your personal finances more easily if you can find an insurer that allows you to start a car insurance policy with minimal upfront cash.

It's also worth noting that a lower down payment might mean slightly higher monthly payments. That’s why you need to compare options carefully especially when you’re not in a situation to afford car insurance.

Also, if you’re financing your car loan, your lender may have requirements regarding minimum coverage. If this is your case, make sure your auto insurance meets both legal and loan obligations.

You can obtain the lowest down payment auto insurance from the most affordable insurance agency. L.A. Insurance has over 200 regional offices to provide the most affordable full-coverage auto insurance across the United States.

5. Look for Car Insurance Discounts

There are good reasons to ask about discounts to your insurer if you can’t afford car insurance costs. Many insurance companies offer discounts to those who have a good driving record, bundle home insurance and auto insurance, or even enroll in a pay-per-mile program.

Other discounts apply to students with good grades, military members, or those with anti-theft devices in their vehicles. Some insurers also provide low-mileage discounts if you drive less than 12,000 miles annually.

So, contact your insurance company and ask about discounts because sometimes they might not apply automatically. Hopefully, with discounts, you can afford your car insurance.

6. Adjust Your Payment Due Date

If your insurance premium is due at an inconvenient time, see if your insurance company allows you to adjust your payment due date. This small change can help align your budget especially if your income comes in after your current due date.

You can do it easily by contacting the insurance company’s customer service department via phone, email, or online chat. Some insurers allow flexible payment schedules that let you pay monthly, quarterly, or semi-annually.

If you’re struggling, consider asking about deferral options to avoid a policy lapse. Please note that missing a payment could lead to fees, higher auto insurance rates, or even a license suspension.

7. Reduce Coverage

Consider adjusting your coverage to lower your insurance premium if you can’t afford car insurance. While you must carry minimum coverage to drive legally, dropping comprehensive and collision insurance on an older vehicle could save you money.

However, removing too much coverage can be risky. If you get into a car accident, you might have to cover damages and medical bills by yourself. Before you do so, compare potential savings against the cost of replacing or repairing your vehicle after an accident.

Learn about different types of car insurance coverage to see whether removing any particular coverage worth it or not. Also, in case the car you drive is leased or financed, you need to ask your lender about whether do you need full coverage on a financed car.

8. Change Your Vehicle

Your auto insurance depends heavily on the type of vehicle you drive. If you own a high-risk car – like a luxury car or model with expensive repairs, your insurance costs will be higher. That’s why switching to a cheaper car insurance category, like a truck or a vehicle with strong safety ratings, can make your insurance premium more affordable.

Please note that if you’re leasing or financing a car, consider refinancing your car loan to reduce monthly payments. This way you can free up extra cash to afford your auto insurance policy. Always check how make and model impact car insurance rates before making a change.

9. Ask Your Agent About Reinstatement

If your auto insurance was canceled due to missed payments, don’t just assume you need a new auto policy right away. In most cases, you may have a window of time often a few days to 30 days, depending on the insurance company to reinstate it.

Ask your insurance agent as soon as possible if your policy is canceled and you want to reinstate it. Reinstating a canceled policy will not only save you from higher premiums but also prevent a lapse in coverage from affecting your credit score.

However, a canceled policy might come with a fee. But that’s way too cheaper than buying a new car insurance policy after a default. Keep in mind that a gap in coverage can also result in higher auto insurance rates in the future. Call your insurance company immediately and ask about your reinstatement options.

10. Switching to Pay-Per-Mile Insurance

Another good thing to do to afford your auto insurance easily is to switch to pay-per-mile insurance. This would be ideal for you if you don’t drive much.

Instead of paying a fixed insurance premium, this policy charges a base rate plus a fee for each mile driven. This could be ideal for you if:

• You're a low-mileage driver
• You work remotely
• You carpool

Many renowned insurers use telematics or usage-based insurance (UBI) programs to track your mileage through a mobile app or a plug-in device. Safe driving habits like avoiding hard braking or late-night driving can lead to extra discounts. Before switching, compare auto insurance rates. Make sure this plan truly fits your budget and driving behavior.

11. Improve Your Credit Score

Your credit could affect your car insurance rates. Many insurance companies use it to assess risks. A low credit score can lead to higher auto insurance premiums and make you unable to afford auto insurance.

That’s why, to improve your credit, you need to focus on paying your bills on time, reducing credit card debt, and avoiding loan defaults. If you find financial difficulties with credit card payments, consider refinancing to lower your interest rate. This way you can achieve a stronger credit history over time which will eventually help you qualify for getting cheaper car insurance.

If you’re living in California, Michigan, Massachusetts, or Hawaii, please know that these states have restricted insurers from using credit to set insurance rates.

Learn More: What is the cost of car insurance based on credit score?

12. Budgeting and Cutting Unnecessary Expenses

Well, the most crucial thing to do when it comes to affording your car insurance is to review your budget carefully. If you could possibly make small savings from everyday expenses, it can add up and make room for auto insurance payments.

Here are some areas where you can cut costs:

• Cancel Unused Subscription: Streaming services, gym membership, or apps you rarely use.
• Reduce Dining Out: Cooking at home saves a significant amount over time.
• Lower Utility Bills: Adjusting your thermostat or using energy-efficient appliances can cut costs.
• Reassess your insurance: Bundling home insurance and auto insurance might offer discounts.

Even a minor adjustment can free up enough money to keep your car insurance policy active. After all, it’s a legal necessity in nearly every state in the USA. So, without it, you remain completely off guard on the road.

13. Check State-Funded Insurance Programs

In the modern world of consumerism, everything is getting expensive, and no one can deny that fact. So, it’s fine if you sometimes face difficulties paying your auto insurance bills. And that’s why some states come forward to offer state-funded insurance programs for low-income drivers.

If you can’t afford car insurance, check if your state provide assistance. Examples include:

• California’s Low-Cost Auto Insurance Program (CLCA): Affordable liability insurance for eligible drivers who have a valid driver's license, and own a vehicle valued at less than $25,000.
• New Jersey’s Special Automobile Insurance (SAIP): A low-cost personal injury protection (PIP) plan is offered where drivers can get medical coverage-only at a cost of $365 a year.
• Hawaii’s Aid to the Aged, Blind, and Disabled (AABD) Program: Offer free auto insurance for qualified drivers.
• Maryland Automobile Insurance Fund: Provide low-cost insurance for eligible drivers.

These programs have income requirements and may provide only minimum coverage, but they help prevent driving without insurance and facing legal penalties. Before applying, check your eligibility.

14. Use Public Transport

If you truly can’t afford car insurance, you can use public transport which could be a temporary or long-term solutions. Many U.S. cities, including Michigan’s urban areas, offer buses, trains, and ride-share programs that cost far less than owning a vehicle.

Benefits of public transportation:

• Saves Money: No need to pay for auto insurance, fuel, maintenance, or parking.
• Avoid legal Trouble: Prevent the risks of driving without insurance, which can lead to fines, license suspension, or repossession.
• Lower Environmental Impact: Reduces carbon emissions compared to individual vehicle use.

If your job is within reach of public transit, this can be an effective way to avoid high insurance costs.

15. Explore Non-Owner Car Insurance

If you don’t own a vehicle but still need coverage at an affordable price, then you can take advantage of non-owner car insurance. This policy provides liability insurance for drivers who occasionally rent or borrow cars.

Why consider non-owner car insurance?

• Cheaper than standard auto insurance
• Help avoid gaps in your insurance history
• Help with legal compliance if you frequently rent cars or drive someone else’s vehicle.

What Happens If You Can’t Pay for Your Car Insurance?

If you fail to pay car insurance premiums, you might face some serious consequences. Most insurance companies offer a grace period which is typically 10 to 30 days before cancelling your policy. If you don’t make a payment by then your auto insurance policy will lapse, and you’ll have to drive uninsured which is illegal in 49 states in the USA except for New Hampshire.

A lapsed policy leads to:

• Higher auto insurance rates: Future insurers may see you as a high-risk driver and raise your insurance rates.
• License Suspension and Fines: Many states penalize driving without insurance with fees or even license suspension.
• Vehicle Repossession: If you have financed a car, your lender may require insurance coverage. A lapse could lead to repossession.
• Negative Impact on Credit Score: Unpaid balances sent to collections can hurt your credit score which eventually affects loan and mortgage approvals.

If you can’t afford car insurance for this month, we’d recommend communicating with your insurance company before the policy expires. Discuss payment deferral or reinstate your policy before it’s too late.

What Happens If I Can’t Afford Car Insurance After Accident?

Of course, the severity of the consequences will mostly depend on the severity of the damage if you don’t have car insurance after the accident. Even if you had an auto insurance policy but missed a payment, your lapsed coverage means you’ll be treated as an uninsured driver.

Here's what can happen:

• Out-of-Pocket Expenses: Without liability insurance, you must cover damages, medical bills, and legal fees yourself. A serious injury claim can cost thousands or even millions of dollars.
• Lawsuit Risks: The other driver can sue you for damages, possibly leading to wage garnishment or asset seizure.
• License Suspension and Fines: Many states impose fees, license suspension, or vehicle impoundment for driving without insurance.
• Difficulty Getting Future Insurance: A lapse in coverage can lead to higher auto insurance rates and require an SR-22 to reinstate your license.

Can’t Afford Insurance on Financed Car, What Should I Do?

If you have a financed vehicle, you can’t skip car insurance. Your lender requires full coverage including collision and comprehensive insurance to protect their investment. If your policy lapses, they might buy force-placed insurance, which is expensive and only covers the loan balances, not you.

Here's what you can do about it:

• Contact your insurer and ask about payment plans or deferral options.
• Look for cheaper car insurance from different insurance companies.
• Raise your deductible to lower your monthly premium.
• Check refinancing options with lower interest rates.
• Reduce unnecessary coverage and keep only the required minimum coverage.

Learn More: Can I Get Liability Insurance on a Financed Car?

What Happens If You Drive Without Car Insurance?

No matter what you cannot cancel your auto policy or drive uninsured. If you have a vehicle, there’s no way you can skip minimum car insurance coverage. If there’s a financial issue, you should simply discuss it with your insurer. If they can’t help you, you can seek aid from state-funded programs. If you still drive without having auto insurance, there are serious consequences for it.

Here's what you’re most likely to face if you drive without car insurance and get pulled over:

• Driving without insurance can lead to hefty fines, suspension of license plate and registration, and jail time in most states.
• In case of a car accident, you must pay for damages, medical bills, and legal fees by yourself.
• The other driver can sue you for damages.
• Your vehicle may be impounded, and you’ll have to pay fees to get it back.
• If your car insurance is financed, your lender may impose forced-placed insurance.
• A lapse in coverage makes it harder to find affordable auto insurance in the future.
• Some states require an SR-22, which leads to higher auto insurance rates for several years.
• Multiple offenses could result in jail time, depending on state laws.
• You risk being personally responsible for hundreds of thousands of dollars in liability.

Key Factors That Affect Car Insurance Affordability

There are a number of factors that insurers use to set your auto insurance rates. These are very crucial when it comes to the affordability of car insurance. Improving these factors, especially those within your control, such as maintaining a clean driving record and a good credit score, can make your insurance cheaper.

• Driver’s Age: Young drivers pay the highest rate, and the more driving experience you gain, the less you pay. You can learn more by reading how much is car insurance by age.
• Gender: Although gender isn’t legally allowed use in many states to set car insurance rates, it still may affect car insurance rates. Learn the average car insurance rates by gender.
• Driving History: The way you drive also impacts your insurance rate. If you have previous accidents, violations, or DUI convictions, you’ll face higher rates. So, you need to try to keep your driving records clean. Read how does driving history Affect car insurance rates.
• Credit Score: Many states still use insurance-based credit scoring systems to set rates for car insurance. If you have an excellent credit score, you will face lower car insurance rates.
• Vehicle Type: The type of vehicle you drive whether it’s a minivan, sedan, luxury car, or sports car, affects your insurance rates as well as your affordability. Cheaper cars are more affordable to insure.
• Marital Status: In some states, even your marital status can affect your rates. Married couples usually pay less than single, divorced, or widowed people. Learn more about how does marital status affect your car insurance costs.
• Where You Live: Your location has an impact on your auto insurance rates. Cities with higher rates of crime, accidents, and violations usually see higher rates. See how does your location affects car insurance rates.
• Annual Mileage: The more you drive, the more you’ll pay. If you drive more than 15,000 miles each year, you’ll face much higher rates, compared to someone who drives less than 7,500 miles. See how does annual mileage impact car insurance rates.

You can learn more about how much is car Insurance. This will help you compare national average car insurance rates with the quotes you received. This way, you can find more affordable insurance and maintain minimum car insurance coverage even if you’re financially broke.

What to Do When You Can’t Afford Car Insurance: The Bottom Line

Not being able to afford car insurance doesn’t mean you should go without it. Contact your insurance company, explore discounts, adjust your coverage, or switch to pay-per-mile insurance. If you’re in a tough spot, budget wisely, check state-funded programs, or consider public transport. Avoid lapse in coverage as the long-term consequences are far more expensive. Stay insured, stay protected.

Frequently Asked Questions (FAQs)

What happens if you don't have car insurance and get into an accident?

If you cause an accident without car insurance, you’re responsible for all damages, medical bills, and legal fees. The other driver may sue you, and you could face fines, license suspension, or even vehicle repossession if it’s financed.

Is it normal to pay $200 for car insurance?

Yes, auto insurance rates vary based on your state, credit score, driving history, and vehicle type. In some states, $200 per month is normal, while others offer cheaper car insurance. If you’re in doubt, compare car insurance rates to find a better rate.

What should I do If I can't pay my car insurance this month only?

Contact your insurance company immediately. Some offer grace periods, payment deferrals, or installment adjustments. Avoid letting your policy lapse, as it can lead to higher future premiums and potential license suspension.

How can I get emergency help paying car insurance?

Check state-funded insurance programs, local nonprofits, or financial assistance programs. Some states offer low-cost auto insurance for low-income drivers. You can also adjust your budget or check out low-down-payment insurance options.

Do I need to get auto insurance before buying a car?

Yes, most dealerships and lenders require proof of insurance before finalizing a car loan or lease. If buying from a private seller, you must have minimum coverage before legally driving the vehicle home.