The Best Auto Insurance for Low-Income Drivers 2024

With an average annual cost of $1,194, GEICO is well below the national average rate for car insurance ($2,071). We picked GEICO as our top pick because of its affordable rates, a wide array of discounts, and a large selection of coverage options, from minimum coverage to full. Unlike a few of the smaller insurance providers that have better average rates, GEICO is available in every state, making it more accessible to low-income families and drivers.

Affordable Rates for Low-Income Drivers

With an average national annual rate of $1,194, GEICO is the second-most-affordable large provider, just behind USAA ($1,151). It’s also one of the most affordable companies for low-income drivers. Here’s how GEICO’s rates for low-income drivers compare with competitors.

Cheap Rates for Low-Income Single Parents

The cost of auto insurance for teens is among the highest in the country. Teens have the highest  rates of claims, accidents, and moving violations of all age groups, which leads to an average premium of around $3,700 annually. If you add a teen driver to your policy, you should expect your rates to increase as well.

Fortunately, companies like GEICO offer cheap rates for low-income single parents. If you’re a single parent struggling to find affordable car insurance, look to GEICO.

Big Savings

You can save even more on your policy by taking advantage of GEICO’s many discounts. Depending your location and background, you may be eligible for the following discounts with GEICO:

For decades, studies from institutions like the Federal Trade Commission have shown that individuals with bad credit have more claims and claims with higher costs.⁶ Inevitably, this has led insurers to view people with poor credit as high-risk drivers, which in turn leads to premium increases.

Here’s how much the average driver will pay for car insurance based on their credit score:

Even if you have bad credit, you do have options for great coverage at an affordable rate. Not only is Nationwide one of the oldest and most popular providers in the country, but it also offers some of the cheapest rates for drivers with low credit.

Cheap Rates for Low-Income Drivers With Poor Credit

Although not all low-income individuals and families will have bad credit, many do. A study by the Federal Reserve identified a significant correlation between income and credit score: Low-income individuals and families had lower credit scores than any other income bracket.⁸

Fortunately, companies like Nationwide offer affordable rates to drivers with a low credit score. Here’s what your insurance rates might look with Nationwide compared to top competitors:

Great Gap Insurance for Leased Vehicles

Whether you decide to take on a co-signer or save up for a large down payment, there are ways to get approved for a loan or lease on your vehicle with bad credit. If you do get approved for a lease with bad credit, Nationwide offers gap insurance to help mitigate the financial risk that comes with totaling your vehicle.

Gap insurance helps you cover the gap between what you owe and the actual cash value (ACV) of the vehicle if it’s totaled. Since most vehicles depreciate over time, your car’s actual cash value (ACV) will be lower than the vehicle’s original price. Since your coverage will pay only for claims to the vehicle’s current value, not its original price, gap insurance will pay for what your coverage doesn’t.

If you’re a low-income military veteran, you can sign up for USAA, the cheapest large insurance provider in the country. Since veterans, especially young veterans, are in some of the lowest tax brackets in the country, this makes USAA a great option for low-income veterans looking for affordable rates.

June 2022 marked USAA’s 100-year anniversary, and for over a century, the provider has offered affordable insurance rates, financial advice, benefits, and other great perks to its members.

Affordable Rates

USAA is the most affordable large insurance provider in the country, which, as we’ll get into below, can be important for veterans and military families.

Nearly 500,000 veterans in America spend 50 percent of their income on rent, and younger veterans (ages 18 to 34) are living in poverty at rates higher than any other age group.⁹ Although support for veterans has improved a lot over the past few decades — enough to put the veteran average income over the national average — large pockets of low-income veterans are still struggling to make ends meet.

USAA’s central mission is to enable its members and their families to find financial security, and it demonstrates that mission with its great prices, coverage options, and discount opportunities. You can save even more on your USAA car insurance through the following discounts:

• Safe driver discount for going five or more years without an accident
• Up to 10 percent off for bundling your home and car insurance
• A 3 percent discount for making automatic payments
• Good student discounts
• Up to 15 percent off for keeping your car on a military base
• Up to 60 percent off for keeping your car in storage when you’re deployed overseas

Excellent Financial and Customer Support

Having low income may mean you don’t have good credit. If you have low credit, are struggling with managing your finances and monthly car insurance premium, or don’t know what kind of insurance you can afford, USAA has you covered. Its members now have access to Schwab, a financial services company that can help you manage your financial and auto insurance needs. Just by being a USAA member, you can benefit from the Schwab partnership in the following ways:

• One-on-one financial guidance: USAA members can call Schwab financial support agents 24/7. They can give tips and answer questions about managing your finances, setting a budget for your auto insurance, and navigating other money-related challenges.
• Investment resources: Schwab has its own interactive digital platform, where you can check out investment guides, create a portfolio, monitor your investments, and learn the basics of investing.
• Calculator tools: Unsure if you can take on more than your state’s car insurance minimum requirements? Schwab’s easy-to-use calculator can help simplify all of the numbers, percentages, and details of your auto insurance plan.

On top of providing financial help, USAA consistently ranks in the top three in the J.D. Power customer satisfaction index, so you know you’ll be in good hands when you have questions or need to review your policy.

Additional Coverage Options

Because USAA offers some of the lowest rates available, you might want to consider getting some additional coverage options. On top of liability, you can add uninsured/underinsured coverage, collision coverage, comprehensive coverage, and medical coverage (PIP).

Other add-ons and insurance features include:

• Rideshare insurance: If you drive for a rideshare service such as Uber or Lyft, you may want to consider rideshare insurance, which will protect you from situations in which neither your personal insurance nor the rideshare company’s endorsement provides adequate coverage.
• Car replacement insurance: USAA will help you pay for a new car if your car is totaled. When you settle your claim, expect an additional 20 percent of your totaled car’s value from USAA.
• Accident forgiveness: Accident forgiveness, which guarantees your claims won’t go up after an accident, is free with USAA after five years of being accident-free.
• Roadside assistance: Stranded with a flat tire or overheated engine? USAA’s roadside assistance service can help get your car up and running or provide you with a tow.

Although USAA is the cheapest large provider, Metromile is, on average, the cheapest auto insurance company in the country regardless of size. Its average annual cost of $662, or $55 per month, is about 20 percent of the national average rate for car insurance. If you live in one of the eight states where Metromile operates and have low monthly mileage, you may be eligible for the most affordable insurance in the country.

Pay-Per-Mile Insurance

Metromile is a pay-per-mile insurance company, which means it determines a dollar amount for each individual mile you drive. Metromile determines your per-mile base rate by looking at factors such as your credit score, driving history, age, and marital status.

Once Metromile determines your rate, it will charge you monthly based on how much you drive. Metromile uses the Metromile Pulse device to track how far you drive and other driving habits, which we’ll review more closely in a section below.

Let’s look at an example of what this might look like for someone with a base rate of $0.08 cents per mile. To make it interesting, let’s see how their rates would drop if they drove 100 fewer miles each month over the course of four months.

As we discussed in an earlier section, it’s not hard to earn significant savings on your car insurance by curbing your monthly mileage — for example, by carpooling, riding public transport, or bicycling — when possible.

Affordable Option for Young Drivers

With less experience and training, teen drivers get into accidents at higher rates than any other age group. That means auto insurance is more expensive for young drivers and their parents. The average annual car insurance rate for teen drivers is $3,751, which is nearly double the national average.

With Metromile, there’s a good chance you’ll find more affordable insurance even if you’re a teen driver. In fact, Metromile claims you could save as much as $1,000 per year on car insurance if you drive fewer than 50 miles per week. Data from the Federal Highway Administration shows that teens drive about 140 miles per week, which is the lowest average mileage rate of any age group.¹³

Tracking Made Easy

The Metromile Pulse device is a telematics (GPS) device that plugs into your car’s diagnostic port and gathers data based on your driving habits. It took us only a few minutes to open our Pulse device, plug it in, and access the tracking details through the Metromile app.

Although the main purpose of the app is to track the number of miles you drive, you can also access other cool features that tell you about the status of your car — such as whether you’re having issues with your engine, exhaust, or other parts of your vehicle — thereby helping you stay safer on the road.

Right behind Metromile, in second place for the cheapest overall provider in the country, is Root Insurance, another usage-based insurance company. Unlike Metromile, which looks at how many miles you drive to determine rates, Root tracks how safely you drive on a monthly basis. The more safely you drive, the cheaper your insurance rates will be. Root’s annual average rate is $829, which means you can save a lot on your car insurance by demonstrating safe driving habits.

Root Test Drive

Root determines your monthly base rate based on your driving record, location, type of car you drive, and other factors that traditional insurers use to determine your fixed base rate. However, the No. 1 factor in your rates is your driving behavior, not your income, which Root tracks via Root Test Drive through its app.

Your first month with Root Test Drive will determine whether you qualify for Root. If your driving habits aren’t up to par, Root will deny your insurance application. The insurer is very selective, which is how it keeps its rates so low. Here are a few things Root tracks during your Test Drive and for your monthly rate:

• Cell phone usage: Root tracks how often you use your phone while you’re on the road, a form of distracted driving.
• Braking habits: The Root app tracks how smooth your braking is. Sudden braking might suggest that you’re driving too close to other cars or not paying attention to the road.
• Turns: Do you often make hard turns? It might hurt your Test Drive score at the end of the month.
• When you drive: Some times of the day, like late at night on the weekends, are statistically less safe for driving. If you make a habit of driving during unsafe hours, you might hurt your score.

Drivers With Poor Credit

Root is a great option for drivers with poor credit. Although Root evaluates your credit score for your fixed base rate, credit has a much smaller influence on your monthly rate with Root than it does with traditional insurers. In fact, Root has committed to removing credit score from its estimation process entirely by 2025.

Because Root doesn’t rely on credit score as much as most insurance providers do, you’re more likely to save with Root if you end up passing the Test Drive.

Robust App Features

The Root app does much more than track your driving and create estimates for your car insurance rates. The app will notify you of how your insurance rates change when you add or remove coverage, and you can upload accident photos to the app directly to file claims in less than three minutes.

Through the app, you can do the following actions:

• Request personalized car insurance quotes
• Customize your coverage options
• Add other drivers to your policy
• Process claims
• File an SR-22
• Cancel your policy
• Refer your friends for cash (anywhere from $10 to $100, which you can transfer straight to your bank account)