Car Insurance for Unemployed Drivers: What to Know

Unless you have poor credit or don’t make your premium payments on time, your unemployment shouldn’t meaningfully influence how much you pay for car insurance. Navigating unemployment is hard enough without having to worry about expensive car insurance costs.

Here’s how to find the cheapest car insurance companies as an unemployed driver.

Do your car insurance rates increase when you’re unemployed?

Your employment status doesn’t affect your rates, but the circumstances around unemployment could lead to higher premiums. For example, not having a job typically makes it harder to submit on-time payments for insurance premiums, credit cards, and more. Making late payments or having poor credit can result in higher average premiums.

If you’re unemployed, but make on-time payments and have no credit issues, you shouldn’t face higher insurance costs.

Factors that affect car insurance rates

To better understand how your job affects auto insurance prices, it helps to know what insurers look for when giving you a quote. The National Association of Auto Insurance Commissioners (NAIC) and the Insurance Information Institute (III) list several factors that influence your rates, including:2

• Location: Traffic patterns, crime rates, and risk of natural disasters in your ZIP code can all affect rates.

• Personal details: This includes your age, marital status, employment, homeownership status, credit score, and other personal information.

• Usage: Insurers typically want to know your annual mileage and daily commute.

• Driving record: Accidents, DUIs, and other traffic violations you’ve had while driving can increase rates.

• Vehicle type: Safety features, replacement and repair costs, and the theft risk of your car can all influence your rates.

You’ll notice that employment status didn’t make the list. Though losing your job won’t change your costs right away, it can indirectly influence your costs later on or lead to higher premiums for a new car insurance policy if you shop around while unemployed.

Cheapest car insurance for unemployed drivers

If you’re looking to lower your auto insurance rate, you should explore working with an auto insurance company known for offering low premiums. Luckily, you have many options to choose from, no matter where you live.

Insurify’s data team reviewed hundreds of quotes for drivers across the country to determine which companies are offering the lowest rates. Below is a list of top companies offering the lowest average monthly car insurance premiums, nationwide.

How unemployed drivers can get cheap car insurance

Being unemployed presents a number of challenges. The last thing you need is to struggle to find affordable auto insurance. Here’s what to do to find the right coverage without overpaying.3

1. Compare car insurance quotes

Your first step is to see what’s available. Make it a priority to shop around and get quotes from a few different companies.

If insurers ask about your employment status or job title, you should answer honestly. Not every insurance company will weigh employment the same, and some insurers don’t factor in your employment status or job title at all.

2. Find discounts

When looking for policies, it’s essential to ask about any potential discounts or offers that might apply to you. Insurance companies often offer discounts to customers who bundle multiple policies with one company or have a track record of safe driving. You might also earn a discount for low mileage or opting for paperless billing.

Every penny saved counts and can help you manage your financial situation more efficiently, especially when you’ve lost your primary source of income.

3. Consider pay-as-you-go insurance

If you’re driving less because you’re no longer commuting to and from work, look into pay-per-mile insurance coverage. Usage-based car insurance companies like Hugo calculate premiums according to your annual mileage. It’s a great way to avoid higher rates if you don’t have a daily commute or have more sporadic and less predictable driving patterns.

4. Maintain a clean driving record

Your driving history reflects your behavior on the road, including any past accidents, speeding tickets, or other traffic violations. Insurers weigh this factor carefully when determining your car insurance premium. Generally, the fewer accidents or violations you have, the lower your risk and the less you pay for coverage. Drivers with a clean record earn low rates.

5. Lower coverage and raise deductible

Insurance coverage needs can change according to the age and condition of your vehicle. If you have an older vehicle, the car’s value might not justify the cost of full-coverage auto insurance. If you determine you no longer need comprehensive or collision insurance, you’ll see a notable drop in your auto insurance rates.

Another option is to raise your deductible, which is the amount you commit to pay up front if you file a claim. A higher deductible usually leads to lower rates. Remember that you’ll need to have the cash on hand to cover that amount if you need to file a claim.

Is there relief for unemployed drivers?

If money is tight, you can start by asking your insurance company if it offers a grace period. In some states, auto insurance laws may require insurers to provide an extension of seven, 10, or 31 days to make premium payments. If your state doesn’t mandate a grace period, you can contact your insurance company or agent to see if your policy allows any payment flexibility.

If you’re worried about keeping up with car payments, contact your lender. They may let you adjust your due date, skip a payment or two, or make interest-only monthly payments to give you some breathing room. It’s also a good time to look at your budget to see if you have to adjust your spending anywhere else.

Unemployed car insurance FAQs