What should you do if you can’t afford your auto insurance bill? [Update + Advice]

If you can't afford your auto insurance bill, you have some options. Look into available discounts with your current insurance company, or shop for quotes from other companies and see if you can find a better deal. Compare quotes here.

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Rachel Bodine graduated from college with a BA in English. She has since worked as a Feature Writer in the insurance industry and gained a deep knowledge of state and countrywide insurance laws and rates. Her research and writing focus on helping readers understand their insurance coverage and how to find savings. Her expert advice on insurance has been featured on sites like PhotoEnforced, All...

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Written by Rachel Bodine
Insurance Feature Writer Rachel Bodine

Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products including home, life, auto, and commercial and working directly with insurance customers to understand their needs. She has since used that knowledge in her more than ten years as a writer, largely in the insurance...

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Reviewed by Leslie Kasperowicz
Farmers CSR for 4 Years Leslie Kasperowicz

UPDATED: Apr 23, 2022

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Sometimes life throws you a curveball – you lose your job, are hit with a big medical bill, or need to pay for legal fees. Whatever the reason may be, you suddenly can’t afford to pay for your auto insurance and you need to know what your options are.

Have you found yourself in a tough spot where you can’t afford your auto insurance bill and need to lower your rates? Let’s go over your options.

If you can’t afford your auto insurance payment this month, the best thing you can do is shop around. You can get free quotes from multiple insurers by using our free tool above.

How You Can Pay Your Auto Insurance Bill

If you sense financial hardships coming on, your best option is to drop some auto insurance coverage to a level at which you can afford. However, be aware that you might be required to carry full coverage if you’re financing your car.

Many insurance companies provide auto insurance discounts if you’re a member of a group or an organization, so it’s always good to ask what discounts are available. This video from Geico touches on just a few of the discounts you might be able to get from your insurer.

There are a few places that help with auto insurance. Only three states have programs designed to help low-income families with their bills, including auto insurance. But, if you live in one of those states, it’s something to look into. California, Hawaii, and New Jersey are currently the only states with programs to help.

California’s Low-Cost Auto Insurance Program (CLCA) allows drives to purchase liability-only insurance at a lower limit than the state typically requires. This video discusses the CLCA a little and what the requirements are.

To be eligible, you must meet income requirements, have a good driving record, and meet certain other requirements.

These are the basic liability policy limits for CLCA:

  • $10,000 bodily injury or death per person
  • $20,000 bodily injury or death total per accident
  • $3,000 property damage liability total per accident

For an extra fee, drivers can add MedPay and uninsured motorist coverage.

New Jersey’s Special Automobile Insurance Policy (SAIP) supplies drivers with up to $250,000 for medical treatments and a $10,000 death benefit.

Hawaii’s program is called their Aid to the Aged, Blind, and Disabled (AABD) program. This is for people over the age of 65 or for those who meet the Social Security Administration requirements to be deemed blind or disabled. This provides aid for necessities to this group, including help with getting the cheapest auto insurance.

Another option is to start lowering your auto insurance rates today. It’s always better to be safe than sorry, especially when it comes to something that could be as expensive as a lapse in auto insurance coverage.  If you want to lower your insurance rates, there are a few different things you should consider doing:

Shop Around for Auto Insurance

Most personal finance experts agree that the best way to lower your auto insurance rates is to shop around for rates from other insurance companies. Often times the only way to really see a substantial drop in rates is to switch your insurer. To begin, use a tool like the one below to check for quotes from different insurance providers in your area.

Drop Extra Coverage to Save Money on Auto Insurance

Most states only require liability coverage on your vehicle, as you can see below with this data from the Insurance Information Institute (III). Check out the state minimums for auto insurance coverage to see how much auto insurance you can get away with legally in your state.

Minimum Auto Insurance Liability Requirements by State
StatesMinimum Auto Insurance Liability Requirements
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Often times the bare minimum, basic coverage option is quite affordable. While not ideal, it can be used in the short term until you are able to get back on your feet. It might make sense to start dropping some unneeded coverage.

If you can’t afford auto insurance excess costs, consider how much your car is valued for?  If your car is older and not worth that much money anymore, you should consider dropping collision insurance and comprehensive coverage. By doing so, you will be able to save a big amount on your monthly bill.

Just remember, however, if you drop these coverage types, you might be on the hook for paying for your own auto repairs if something happens to your car.

Raise Your Deductibles to Save Money on Auto Insurance

If you raise your deductibles, you will see your rates drop.  Although the drop will not be significant, it might help just enough to get you to the point where you can afford to make your bill payment.

Be forewarned, however, if you are involved in an accident and need repairs done to your car, you will be forced to fork out more money out of pocket. If this is a risk you are willing to take, then by all means – raise your deductibles!

Drive a Different Car to Save Money on Auto Insurance

One of the better ways to lower your auto insurance rates is to drive a car that is cheaper to insure. When it comes to insurance rates, not all vehicles are created equal. Some cars, for a myriad of reasons, are more expensive to insure than others. If your car make and model happen to be the type that demands a high premium, you might want to reconsider what car you drive.

Older, less pricey models are typically cheaper to insure.

Remember, in the United States, driving without auto insurance is illegal. The penalties for letting your auto insurance lapse can also be quite severe. Therefore, it’s always advised to maintain good standing with your auto insurance company.

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Prevent a Lapse in Auto Insurance

Unfortunately, if you try to turn your auto insurance policy back on after a letting your auto insurance lapse, you may find that your insurance rates have increased.  Insurance companies use multiple calculations to determine your risk to the insurer, and one of the factors they look at is whether or not you’ve had a record of not paying your bills.

It’s also illegal to drive without insurance, and each state handles the penalties differently if you’re caught. The Consumer Federation of America notes what fines and penalties you can face for your state. Not to mention the big increase if your coverage lapses.

Here are some examples of how your rates may increase if your coverage lapses.

% Increase After Coverage Lapse
Company% Increase in SC after a lapse in car insurance coverage% Increase in CA after a lapse in car insurance coverage% Increase in FL after a lapse in car insurance coverage
Liberty Mutualno quote offered16.38%No Quote
Farmersn/a in SC11.90%6.89%
Nationwideno quote offered13.10%n/a in FL
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You can see here that the amount your rates will increase depends on where you live and which insurer you have. But regardless, you’re definitely going to see some increase in your rates.

If your auto insurance policy lapses, you will have to then reapply for auto insurance coverage.  Affording to recent studies, drivers who let their policies lapse ended up paying 8.8 percent more for auto insurance than they originally paid.  The reason or this is because auto insurance companies consider delinquents and non-payers to be high-risk drivers.

What Happens If You Don’t Pay Your Auto Insurance Bill

What happens if you don’t pay auto insurance on time? Unfortunately, auto insurance companies are not that flexible when it comes to helping out people who are struggling to pay the bills. If you are unable to make payment for your premium by the due date, your auto insurance policy will be canceled on that day.  In the event your policy is canceled, you will officially be uninsured.

Other types of insurance, like life insurance, often have what they call a “grace period.”  A grace period is the period of time after your premium is due in which the policyholder can make a payment without losing coverage.

With auto insurance, however, depending on state regulations, there may not be a grace period to speak of. If you miss a payment, your policy would therefore have lapsed. You can see in the previous section that’s not a great idea if you can help it.

What happens if you can’t pay your auto insurance and have a coverage lapse? Where you live changes what happens if you can’t pay your auto insurance. In a lot of places, the penalties for a lapse in auto insurance coverage can be quite severe.

Fines from the police and/or license suspension are just two of the many bad things that can happen to you if you are caught driving with lapsed insurance coverage. Often times, the only way to avoid these penalties is to hand over your license plates and registration to the DMV/RMV in your local jurisdiction.

The most important thing in the event of a lapse, however, is to keep your vehicle off the road.

It’s obvious that you should not drive your vehicle without insurance coverage, but did you know that you cannot even park your car on public roadways without it being registered?  If you do not have a driveway or private spot to park your vehicle in while you wait to renew your coverage, you will need to find other arrangements.

Frequently Asked Questions: What if I can’t pay my auto insurance bill?

Take a look at the frequently asked questions below for more information.

#1 – What if I can’t afford car insurance and I’m 18?

You’re not alone. There are many threads about people who can’t afford auto insurance on Reddit, and it’s a huge problem. When you’re just starting out, you’re trying to get established but auto insurance will be more expensive then than at any other time in your life if you keep a good record.

Americans aren’t alone in this, either. Millions can’t afford auto insurance in the UK, Europe, and countries around the globe. That’s because young drivers are always considered a higher risk. Less experience can lead to more accidents, at least according to auto insurance companies. 

The good news is this won’t last long. Keep checking back with your insurer as you get older because your rates will drop. Also, it helps to shop around. some insurers are way cheaper for young drivers than others.

#2 – What happens if you crash your car and don’t have insurance?

You’ll have to pay out-of-pocket for all damages that happen to your own vehicle. You might even be sued by the other driver or their insurance company.

By law, you need liability coverage, so you’ll likely also be fined as well. If you get caught driving without insurance, you may become a high-risk driver which makes it more difficult to find auto insurance later, and it will cost you more.

#3 – What if you can’t afford auto insurance after an accident?

If you can’t afford auto insurance, what should you do? There are many factors that determine your rates, including your driving record. One accident can raise your rates 

Auto Insurance Rate Increases After One At-Fault Accident
Company Rates with a Clean RecordRates with 1 At-Fault Accident
State Farm$2,821.18$3,396.01
American Family$2,693.61$3,722.75
Liberty Mutual$4,774.30$6,204.78
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That’s a 20 to 49 percent increase for these major insurers with just one accident.

If you end up with an accident on your record, you’ll have to pay more. But you may be able to contest the issue if you don’t think it was your fault, and the accident will fall off of your record eventually. Some states also offer driving school as an option to remove points from your record. DUIs are far more costly than accidents, so focus on keeping a clean record all around.

#4 – Can you get auto insurance with no money down?

It’s possible you can get low or no-down-payment auto insurance. It’s mostly offered if you have an older low-value car, but it’s worth looking into.

#5 – What can you do if you can’t afford your auto insurance deductible?

If you can’t afford your deductible on a valid claim, you’ll need to find that money somewhere. If it was just minor damage, you may want to wait on the claim. But, if the damage is severe and keeping you from driving to work, it’s important that you come up with that money somehow. If you can sell a few possessions or get a payday loan, it may be worth it.

If you can’t pay your auto insurance this month, start by shopping around and get free quotes to compare. Use our free tool to help you save more money on your insurance rates.

Free Auto Insurance Comparison

Compare over 200 auto insurance companies at once!

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