What to do if you can't afford car insurance

The first thing you should do is shop around, just because one insurance company gave you a high quote doesn’t mean it will be the same at every company. Next, look for policy discounts and make sure you’re not overinsuring yourself.

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Kara McGinleySenior Editor & Licensed Home Insurance ExpertKara McGinley is a former senior editor and licensed home insurance expert at Policygenius, where she specialized in homeowners and renters insurance. As a journalist and as an insurance expert, her work and insights have been featured in Forbes Advisor, Kiplinger, Lifehacker, MSN, WRAL.com, and elsewhere.

Updated|6 min read

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Key takeaways

  • You should shop around and get quotes from different insurance companies to find cheaper rates

  • Look for insurance companies that offer a variety of discounts, like affiliation discounts and safe driver discounts

  • If you're a safe driver but are getting high insurance quotes for other reasons, like because you have a low credit score, you might want to consider usage-based insurance or seeing if your current insurer offers a usage-based discount

  • Lowering your coverage limits and raising your deductibles will lower your premiums, but might leave you paying more out of pocket if you ever need to file a claim

When you purchase a car insurance policy, you are paying for financial protection if you get into a car accident, if you cause bodily injury to another person with your car, or if your car is stolen or damaged by a different covered peril, like fire, hail, or falling objects.

In order to keep your car insurance policy in-force, you need to pay your car insurance premium, either monthly or in-full upfront when you buy your policy. Your premiums are calculated based on a variety of factors — some you can control and some you cannot.

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All but two states require you to have car insurance, so more likely than not you are going to need to buy an auto policy. If you cannot afford car insurance there are a few ways to get lower prices, like insurance policy discounts or shopping around for quotes from different insurers. A small handful of states also offer cheap auto insurance to residents who otherwise cannot afford a car insurance policy — you may qualify for one of those programs if your household is below a certain income level.

In this article:

How car insurance premiums are calculated

The price of your car insurance will depend on a number of factors, a big one being how much coverage you need. Car insurance policies are made up of different coverage types, each of which offers a different kind of protection. Below are the coverage components that make up what is called a “full coverage” auto policy:

Coverage Type

What It Does

Bodily injury liability

The part of your liability coverage that pays for medical bills if you've injured someone in an accident

Property damage liability

The other part of liability coverage, covers the cost of property damage you've caused in an accident

Personal injury protection

Covers medical expenses for you or your passengers after an accident

Uninsured/underinsured motorist

Covers the costs if you're in an accident caused by a driver with little or no car insurance


Covers damage to your car that happens when you're not driving


Covers damage to your car after a car accident, no matter who was at fault

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The amount of each of those coverages you choose will affect your rates. Your insurance company will also use a variety of other details to calculate the price of your premiums. When buying a policy, you will need to provide your insurance company with information about yourself and your vehicle.

  • Your driving history: Your insurance company wants to know your driving history because it will help them determine how much risk you pose. They will check your record to see things like how many accidents you’ve been in, if you have points on your driver’s license, and if you’ve filed claims before. Recent accidents, usually within the past 3 or 5 years, will cause you to have higher rates.

  • Your age and location: Teen drivers pay higher car insurance rates than older drivers because they are less experienced and therefore more of a risk. Senior drivers may also pay more. Where you live matters as well, if you live in an area that experiences high-crime rates you’re likely to have higher premiums k.

  • Make and model of your car: How old your car is, what safety features it has, if it’s a luxury vehicle or a sports car, if it’s an electric car, will all be factored into the price of your premiums.

  • Your credit score: A higher credit score means lower premiums, unless you live in one of several states that don’t allow insurance companies to take your credit score into account when calculating your rates

  • Your deductible: The higher you set your deductible the lower your premium, but don’t set it higher than you could actually afford to pay out of pocket in the event of an accident.

Learn more about car insurance premiums and the factors that determine them.

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How to lower the cost of car insurance

When you go to buy auto insurance, don’t panic if at first you receive a high quote. You should always shop around to get multiple quotes from different insurance companies. That said, just because one company gives you a lower quote than another doesn’t mean they’re the right company for you. You should also check reviews of the company before deciding which insurer to go with.

Many insurers will actually offer you a discount if you switch to their company, which is another reason you should shop around.

Car insurance discounts

Besides a discount for switching companies, insurers usually offer customers a variety of discounts for things like safe driving and customer loyalty.

Some other common car insurance discounts include:

  • New vehicle discount, if your vehicle is under three years old

  • Affiliation discounts, depending on the insurance company, active military members, college alumni, and members of fraternities and sororities may be eligible for discounts

  • Good student discounts, if your teen driver has good grades you might be eligible for a discount

  • College student discounts, if your child is away at college and left the car at home you might get a discount

  • Low-mileage discount, the less you drive the less likely you are to get into an accident

  • Anti-theft system discount, safety measures like this decrease the chances of theft and make you less at risk to file a claim

  • Bundle your home and auto policy, most insurers offer a discount if you buy multiple policies with them

  • Educated driver discount, for completing a driver’s education or defensive driving course

Read more about the different types of car insurance discounts.

Changing your coverage limits and deductibles

As a driver, it’s important that you’re protected while on the road, however if you are worried about the price of your auto policy you should be careful that you aren’t paying for too much coverage.

When buying your car insurance coverage, you choose your coverage limits for your liability coverage and your uninsured/underinsured motorist coverage. Your coverage limit is the maximum amount your policy will pay you out for a claim. The higher you set your coverage limits, the more expensive your car insurance will be because you are paying for more financial coverage.

You’ll also have to choose your deductible amount if you have comprehensive and collision coverage. The higher your deductible the lower your premiums will be. If you want to get cheaper insurance rates, you can lower your coverage limits and raise your deductibles.

That said, this is a risky strategy to take. For example, if you get into a car accident, you might end up having to pay more out of pocket if your coverage limits are low. And the same goes for your deductible, if you have to file a claim you will first have to pay your deductible, and if your deductible is high you might not end up saving much more money than you would just paying out of pocket.

You should talk to your insurance agent about how much coverage you need for the amount of driving you do. Be sure you don’t reduce your coverage to the point of not being protected.

Usage-based car insurance

If you’re getting high auto insurance quotes, whether it is because you have a poor credit score or you live in a major city, you might want to consider usage-based insurance, or seeing if your current insurer offers a usage-based discount.

Usage-based car insurance is a type of car insurance that determines the price of your premiums by monitoring your driving habits. This can result in cheaper premiums if you're a safe driver or if you don’t drive often. There are two types of usage-based car insurance policies: pay-how-you-drive policies or pay-as-you-drive policies (also known as pay-as-you-go or pay-per-mile). Companies like Root Insurance will calculate your premiums after tracking your driving through a smartphone app. The safer and more consistent your driving is during that initial period, the lower your rates will be.

Your current insurance company may offer a usage-based discount program, which works in a similar way. You install a plug-in into your vehicle or use a mobile app that tracks your driving, and safe drivers can get a significant discount off their premumsProgressive’s Snapshot program, State Farm’s Drive Safe & Save, and Allstate’s Drivewise are all examples of usage-based discounts. You should talk to your insurance company to see if they offer these programs.

Cheapest cars to insure

Trading your car in for a cheaper one to insure might be drastic, but if you haven’t bought a car yet you should note that certain vehicles are cheaper to insure than others. AAA’s 2018 Your Driving Costs study took a look at the different ownership costs associated with various types of vehicles and found that some types of cars are more expensive to insure than others. If you’re worried about the price of car insurance premiums, consider the type of car you are buying.

Type of car

Annual cost of car insurance

Small SUV


Medium SUV






Large sedan




Medium sedan




Small sedan


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State-run car insurance

Depending on what state you live in, you might qualify for state-subsidized car insurance. Several states, including California and New Jersey, offer programs that help people access car insurance if they aren’t able to afford a policy otherwise. In order to qualify for these programs you have to meet certain requirements, which will vary from state to state. For example, you may need to be below a certain income level or be currently enrolled in Medicaid.

What happens if I don’t pay my car insurance premiums?

If you don’t pay your car insurance premiums your coverage will lapse. If you live in one of the 48 states that requires auto insurance to legally drive and you get caught driving without an active car insurance policy it could result in thousands of dollars in fines.

Your insurance company will give you a grace period of 30 days to pay the premiums you owe before fully cancelling your insurance policy. You should contact your insurance company immediately if you become unable to pay your auto insurance bills. Reaching out before you miss a payment could help you find a solution before you’re at risk of losing coverage.

Having a lapse in coverage could affect you down the line as well. It will stay on your record and result in higher rates in the future when you apply for insurance again.