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August 28th, 2009 | cashrunner | Posted in Finance, Frugality

Auto insurance can be expensive, especially when you’re short on cash. Fortunately, there is some measure of reprieve if you’re a on a low income.

A couple of states have started to offer low-cost auto insurance. California and New Jersey, two states with some of the highest auto insurance rates in the country, have introduced programs to help their low-income residents. Driving without auto insurance is illegal in both these states, so the fact that these programs make insurance affordable means fewer people are forced to break the law.

California

The California Low Cost Auto Insurance Program offers basic liability coverage as well as optional coverage for uninsured motorist bodily injury and medical payments.

Rates

Liability coverage premiums vary by county and range from $210 per year for Monterey County residents to $378 per year for Sacramento County residents. These are huge discounts considering comparable coverage from private insurance companies can be twice as much or more for most drivers.

Eligibility Guidelines

As mentioned earlier, the program is only available to low-income residents. Here are some eligibility guidelines you will need to meet:

Meet low-income requirements (1 person = $26,000, 2 persons = $35,000, 4 persons = $53,000, 8 persons = $89,000)
Meet the good driver standard (no more than one at-fault property damage only accident or more than one point for moving violation in the past three years)
Have had no at fault accident involving bodily injury or death in the past 3 years.
Be at least 19 years old
Have been continuously licensed to drive for the past three years
Have a vehicle currently valued at $20,000 or less.

To receive more information, please visit the CLCA website or call CLCA hotline at: 1-866-602-8861

New Jersey

The State of New Jersey actually offers two different types of policies to meet the state’s legal minimums for auto insurance: the Basic Policy and the Dollar-A-Day-Auto-Insurance Policy (also known as the Special Automobile Insurance Policy or SAIP). The level of coverage you get varies between these two programs.

The Basic Policy is available to all drivers regardless of income. Coverage limits are reduced, however, and may not protect you from being sued. Thus, it is recommended only to those who are unable to afford standard insurance. The SAIP offers less coverage and even lower rates but is only available to low-income residents who are eligible for Federal Medicaid with hospitalization.

Click here to obtain more information about the Basic Policy.

Click here to obtain more information about the SAIP.

Both types of insurance are available through most insurance agents. You can call the Personal Automobile Insurance Plan (PAIP) customer service number at 1-800-652-2471 if you have questions regarding availability.