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Is there auto insurance for the unemployed?

Here's what you need to know...

  • Auto insurance for unemployed drivers is similar to employed drivers, as the insurance company will review the information that you provide to assign you to a rate class
  • Some of the rating factors that can affect your rates include age, driving experience, credit-based insurance score, driving record, claims history, vehicle type, mileage, and driving habits. Rates are higher for individuals who are considered more likely to file a claim
  • While your occupation can qualify you for a credit with some insurers, the company won’t penalize you for being unemployed. Both working and unemployed drivers can qualify for preferred or standard auto insurance
  • Being unemployed can help you keep your rates down. Since you don’t use your vehicle to commute to and from the office, you will qualify for a pleasure usage rating
  • You may be able to keep your mileage low when you’re unemployed. If your annual mileage is below what the average vehicle is driven, you can lower your premiums by taking advantage of a low mileage discount

Does being unemployed affect your auto insurance? If you’re out of work, it’s difficult to qualify for things like auto loans or credit cards. Lenders and credit card issuers only offer credit to people who have a regular and reliable source of income. But is there auto insurance for the unemployed?

You might assume auto insurers do the same, but your employment status has little to do with your eligibility for coverage through any carrier.

While being unemployed won’t affect your ability to qualify for preferred or standard auto insurance policies, it can have an impact on your ability to find cheap auto insurance rates.

You need to understand exactly how car insurance rates for the unemployed are calculated and personalized when you’re shopping around for coverage.

Read on to see how auto insurance for the unemployed might have an impact on rates when you buy a policy. To find cheaper auto insurance for unemployed drivers, enter your ZIP code in our free tool above.

Table of Contents

Unemployment & Auto Insurance

Do you need a job to get auto insurance? No, your employment status can’t affect your ability to buy insurance. If an insurance company were to deny applications because their applicants were unemployed, the state regulating officials would penalize them.

Using someone’s employment status to qualify or rate a driver is discriminatory in nature. This is why there isn’t unemployed auto insurance specifically for someone who isn’t employed.

Is there auto insurance for the unemployed in California? Not exactly, but California is one of the few states to have a low-income auto insurance plan. You can learn more about it here.

How are my auto insurance rates personalized?

Auto insurance rates are personalized. This is why you, your friends, and your family members all pay very different premiums. Auto insurance carriers invest time and money into rate making. This helps the company determine how much they must charge to stay profitable.

This helps the company determine how much they must charge to stay profitable.

After rates are made, the company will use rating factors to come up with a custom price for the coverage that you select.

Each factor that’s used to personalize rates affects the policyholder’s probability of filing a claim based on what the statistics say. Some factors are beyond your control and others aren’t. Here are the most common rating factors used:

  • Age, gender, and marital status
  • Occupation
  • Driving experience and driving record
  • Claim history for at-fault and non-fault claims
  • Mileage and driving habits
  • Vehicle usage (pleasure, commute, or business)
  • Garaging zip code and claims reported in the area
  • Credit-based insurance score (only used in some states)
  • Vehicle size, claims data, and safety features

According to the National Association of Insurance Commisioners (NAIC), your credit-based insurance score isn’t the same as your credit score. A credit-based insurance score is simply a calculation of risk of outstanding debt.

Does unemployment affect auto insurance rates?

Your employment status isn’t a rating factor, but if you go from employed to unemployed, there are a few rating factors that can change. However, affordable car insurance for the unemployed isn’t out of reach.

Since your income will be limited, it’s nice to know that your rates can go down when some of these factors change. That’s because you may qualify for some new mileage discounts and usage-based auto insurance.

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Can I get a usage-based discount on auto insurance?

When your annual mileage goes down your premiums can go down. Insurance companies have different mileage rating bands. The higher your annual mileage, the higher your premiums will be.

When you commute five days per week, you will accumulate miles over the weeks and months.

After you cut out that commute, your annual mileage will go down. If it goes down enough, you can qualify for a low mileage discount. Take a look at the table below to see how much you can save.

Low Mileage Auto Insurance Discounts by Company
Insurance CompanyOffers Low Mileage DiscountDiscount Percentage (if available)
21st CenturyNoN/A
AAAYesNot Available
AllstateYesNot Available
American FamilyYesNot Available
AmeripriseNoN/A
AmicaYes10%
Country FinancialYesNot Available
EsuranceYes15%
FarmersYesNot Available
GEICOYesNot Available
Liberty MutualYesNot Available
MetLifeYesNot Available
NationwideYesNot Available
ProgressiveYesNot Available
Safe AutoNoN/A
SafecoYes20%
State FarmYes30%
The GeneralYesNot Available
The HanoverYesNot Available
The HartfordYesNot Available
TravelersYesNot Available
USAAYesNot Available
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You can save at least 10 percent simply by driving less.

Unemployment & Change in Vehicle Usage

When you’re unemployed, your vehicle usage could change. Your agent will ask you how you drive your vehicle regularly. It might sound like a silly question depending on how it’s phrased, but what they’re inquiring about is whether or not you commute to and from work or school.

There are three usage categories. These include pleasure, commute, and business use. If you go from driving as a commuter or for business, you’ll see your rates drop when you become a pleasure user.

Unemployed Credit Score’s Effect on Auto Insurance Rates

If your credit score goes down, your rates may go up. Auto insurance and your credit score are important. A majority of states allow insurance companies to look at your credit when calculating rates. The company uses insurance scores that are calculated by an agency like FICO or LexisNexis to grade a person’s credit.

While delinquencies and credit mix will affect your score, there are factors that can’t be reported. One of these factors is employment status. The company can raise your rates at renewal if your credit score has gone down.

Covering your regular bills can be difficult when you’re living on a limited income or no income at all. If you’re looking to lower your bills, it’s important to shop around for the best rates. Make sure to update your rating information, solicit quotes, and then you can lower your monthly budget to cover your car.

Ready to find cheaper auto insurance if you are unemployed? Enter your ZIP code below to access auto insurance rates and car insurance quotes for the unemployed from multiple companies. Find the best car insurance company for the unemployed for you.

References:

  1. http://www.naic.org/documents/consumer_alert_credit_based_insurance_scores.htm
  2. http://www.insurance.ca.gov/01-consumers/105-type/95-guides/01-auto/lca/

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