June 27, 2022

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What to Do if You Can’t Afford Car Insurance

5 min read

Between rising gas and car-repair prices, it’s an expensive time to be a driver. And car insurance is no exception. But while you can’t control problems like labor shortages and supply chain issues, there are steps you can take to lower your insurance bill.

Here’s what to do if your auto insurance costs have become unmanageable, plus tips on how to lower your premium.

Don’t cancel your policy

While you may be tempted to skip having insurance altogether, this decision can have long-term consequences. Since every state, except New Hampshire and Virginia, requires drivers to carry some amount of car insurance, getting caught driving uninsured can result in an insurance lapse on your record and can impact your future insurance costs. “Starting a new policy is usually costlier than staying continuously insured,” wrote Janet Ruiz, director of strategic communications for the Insurance Information Institute, in an email.

An insurance lapse could also result in your state requiring you to file an SR-22 form, which is legal proof that you’ve bought your state’s required minimum amount of auto insurance. An SR-22 can stay on your record for several years and some insurers won’t cover a driver with one.

Driving uninsured can have other repercussions, too, including:


  • Having to pay out of pocket for any costs resulting from an accident you cause.
  • Getting your license suspended.
  • Hefty fines.
  • Losing your car through repossession if you have an auto loan or lease.
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Try these options

Dropping your insurance should be off the table, but you’ve got other options when it comes to spending less on car insurance. Here are some of the most effective.

Contact your insurance company

Get in touch with your insurance agent or company as soon as possible if you know you can’t afford an upcoming bill. You may be allowed to delay it or have it combined into future payments, wrote Ethan Warren, managing director at Goosehead Insurance Agency, in an email. “It is always better to be proactive than reactive,” Warren said.

If you’ve missed a payment, insurers typically offer a grace period in which you’re still able to pay without risking a policy cancellation. Grace periods can vary by state and company, so get in touch with your insurer quickly to know how much time you have.

Ask for discounts

Check with your insurance company about the discounts it offers. While they vary by insurer, you could get savings for a variety of reasons, including having a student with good grades, bundling your car insurance with another policy, or signing up for automatic payments and paperless billing.

Raise your deductible

Increasing your deductible is a guaranteed way to lower car insurance costs. If you’re a consistently safe driver who hasn’t filed a claim in the past, or simply don’t drive often, you might be more comfortable taking on a higher deductible than those who drive more or have a history of driving violations. Only consider this option if you can afford the larger deductible in the event of a claim.

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Change your coverage

If you drive an older car and your policy includes comprehensive and collision coverage, you can likely drop both as they only pay out up to your car’s market value, minus your deductible. For example, if you drive a car worth $1,000 and your deductible is also $1,000, you won’t receive a cash payout from a comprehensive or collision claim.

To get the cheapest car insurance possible, carry only your state’s required minimum amount. Good drivers with minimum coverage pay an average of $561 per year compared to $1,630 for full coverage, according to a recent NerdWallet analysis. It’s important to note, though, that in many states, minimum coverage only includes liability insurance, which pays others’ medical bills and expenses after a crash you cause, up to your policy limits. You’ll be on the hook for any damage done to your car.

Consider pay-per-mile insurance

Pay-per-mile insurance is priced by combining a monthly base and mileage rate, which takes into consideration the number of miles you drive. Mileage is typically tracked through a smartphone app or device you plug into your car’s diagnostic port. If you drive infrequently, use public transportation, or need to insure a rarely used second vehicle, pay-per-mile insurance might be a cheaper option than a standard policy. Keep in mind that your driving behavior may be tracked and poor driving habits, like hard braking and driving late at night, may increase your premium.

Shop for a new policy

Shopping around for new insurance is typically the best way to get the cheapest rates. Sometimes you can even get a discount for being a new customer. Compare quotes from at least three different insurance companies at least once a year to be sure you’re getting the best rate possible.

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Work on your credit

Most states — excluding California, Hawaii, Massachusetts and Michigan — use credit to calculate car insurance premiums, and drivers with poor credit usually pay higher rates. While improving credit can’t be accomplished overnight, it can have a big impact on lowering your insurance costs over time.

To work on your credit, focus on paying bills by their due dates and keeping credit card balances well below the card limit.

Use alternative transportation temporarily

If you try the options above and still can’t get your bill down to an affordable amount, consider transportation alternatives. Many cities offer cost-effective public transportation, rideshare services and carpooling you can use until you have room in your budget for a monthly premium. If you’re able, you can also walk or ride a bike to cover short distances.

And if you have access to someone else’s vehicle, consider getting a non-owner car insurance policy, which is typically less expensive than a standard one. It’ll pay for injuries or damage you cause in an accident, plus prevent an insurance lapse, which can help you save on your premium once you switch back to a standard policy.

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