Government Car Insurance for Low Income Drivers: State Programs and Ways to Pay Less

Why there is no federal government car insurance for low income drivers

In the United States, car insurance is regulated by the states, not by the federal government. Each state sets its own minimum coverage, licenses insurers, and decides whether to offer any help for lower-income drivers. That is why you won’t find a federal application for car insurance. Most states have no special low-income program at all. A handful have created one, and every state has a way for high-risk drivers to get coverage when private companies say no.

If someone tells you about a “federal car insurance grant,” be careful. That is a common line in scam ads.

California Low Cost Auto Insurance

California’s Low Cost Auto Insurance program is overseen by the California Department of Insurance. It sells a basic liability policy so drivers with lower incomes can meet the state’s insurance law. According to the Department, you need to:

• Have a valid California driver’s license.
• Meet the program’s income guidelines.
• Own a vehicle valued at $25,000 or less.
• Be at least 16 years old (applicants under 18 must be legally emancipated).
• Have a good driving record, or be a new driver.

The income limits are set as a percentage of the federal poverty level and are updated over time. Earlier Department reports put the cap at 250% of the poverty level, but check the current table with the program before you apply. You can call the program at 1-866-602-8861 or visit mylowcostauto.com.

The coverage is basic. CLCA policies carry $10,000 per person and $20,000 per accident for bodily injury or death, and $3,000 for property damage. The Department’s 2024 consumer alert says these limits stay the same even though California’s standard minimum rose in 2025 to $30,000 / $60,000 / $15,000. Collision and comprehensive coverage are not available through the program, so damage to your own car is not covered.

New Jersey’s dollar-a-day policy

New Jersey’s Special Automobile Insurance Policy (SAIP) is run through the state Department of Banking and Insurance. It is open to people currently enrolled in federal Medicaid with hospitalization. Not every Medicaid plan qualifies, so an insurance producer checks your eligibility using your Medicaid ID number. You can’t get SAIP if your driver’s license or registration is suspended or revoked.

The policy costs $365 a year, or $360 if you pay in full up front. It covers emergency treatment right after an accident, treatment of serious brain and spinal cord injuries up to $250,000, and a $10,000 death benefit. It does not cover damage you cause to other people or their property, and it does not cover damage to your own car. That gap matters: if you cause a crash, you could be sued personally. Most insurance agencies in New Jersey sell SAIP. The state’s Personal Automobile Insurance Plan customer service line is 1-800-652-2471.

Free no-fault coverage in Hawaii

Hawaii law provides free basic no-fault motor vehicle coverage for some people receiving public assistance. Under the state’s administrative rule, Hawaii Code of Rules section 17-654-3, you must meet all three conditions:

• You receive financial assistance payments or Supplemental Security Income (SSI).
• You have a valid driver’s license, or you are an unlicensed person with a permanent disability who can’t drive your own vehicle.
• You are the sole registered owner of the vehicle.

The Hawaii Department of Human Services issues the eligibility certificate. Coverage is limited to basic required coverages. Rules can change, so confirm the current process with your DHS eligibility worker before you rely on it.

State programs side by side

Insurers of last resort and assigned risk plans

Every state has a way to get coverage if private insurers won’t sell you a policy, often called an assigned risk plan or automobile insurance plan. These plans help with access, not price, and premiums can be higher than average. Maryland is unusual because it has a state-created insurer, the Maryland Automobile Insurance Fund (MAIF). According to a 2023 Maryland legislative fiscal note, applicants generally must have made good faith efforts to get coverage from two other insurers, or had a policy canceled or not renewed. MAIF is not a low-income discount program.

Understanding your state’s minimum coverage

Almost every state requires liability insurance, which pays for injuries and damage you cause to others. Limits are written as three numbers. For example, California’s standard minimum of 30/60/15 means $30,000 for one person’s injuries, $60,000 for all injuries in one crash, and $15,000 for property damage. Some states also require personal injury protection or uninsured motorist coverage. Your state insurance department lists the exact rules. In New Jersey, the Department of Banking and Insurance auto page explains the state’s options.

Buying only the minimum lowers your premium, but it also lowers your protection. If you cause a serious crash, costs above your limits can come back to you.

Ways to lower your premium

• Compare at least three quotes. Prices for the same driver can vary widely between companies.
• Raise your deductible if you carry collision coverage, as long as you could pay it after a crash.
• Drop collision and comprehensive on an older car if the car is worth little and is paid off. Lenders usually require them on financed cars.
• Ask about discounts for safe driving, good student, defensive driving courses, paperless billing, and paying in full.
• Try usage-based or pay-per-mile insurance if you drive very little.
• Keep coverage continuous. A gap in coverage often raises future prices.
• Work on your credit. Many states let insurers use credit-based insurance scores, while a few, such as California and Hawaii, limit or ban it.

If the cost of keeping your car is the bigger problem, see our guide to car repair help for low-income families and car grants for low-income families.

Non-owner policies and other special cases

If you don’t own a car

A non-owner policy covers your liability when you drive cars you borrow or rent. It is usually cheaper than a standard policy and can help you avoid a gap in coverage. It is also a common way to meet an SR-22 filing requirement after a license suspension.

If you rarely drive

If a car sits unused for months, ask your insurer whether you can reduce coverage while it is stored. Never drop liability on a car you drive or that your state requires to stay insured while registered.

If you were turned down

Ask the insurer why, and ask an independent agent to shop your state’s assigned risk plan. Your state insurance department’s consumer line can also explain your options. In California, the Department of Insurance consumer help page lists the hotline, 800-927-4357.

Insurance scams to avoid

Low-cost insurance is a target for fraud. Watch for “ghost brokers” who sell fake policies or ID cards online or through social media, often at prices that seem too good to be true. Before you pay, confirm the agent and the company are licensed with your state insurance department, and call the insurer at a number you find yourself to make sure the policy exists. Pay the insurer or a licensed agent directly, not through gift cards or payment apps.

Finding affordable coverage, step by step

1. Check whether you live in California, New Jersey, or Hawaii and see if a state program fits.
2. Look up your state’s required minimum on the state insurance department website.
3. Get at least three quotes for the same coverage.
4. Ask each insurer for every discount and for a pay-in-full price.
5. Confirm the company and agent are licensed before you pay.
6. Review your policy every year and shop again at renewal.

Related guides

• Government assistance for car insurance
• Free cars for low-income families
• Emergency car payment assistance
• Credit reports and scores

Frequently asked questions

This guide is general information, not insurance or legal advice. Programs and prices change, so confirm details with your state insurance department. National Relief Program is an independent website and is not a government agency or an insurance company.