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What is Government Insurance and Do You Qualify?

Car insurance can be a major expense and a study performed by the National Association of Independent Insurers found that some low-income households were spending up to 30 percent of their income on premiums. Especially during these tough economic times, many people will choose to forgo coverage altogether opening themselves up to a host of potential problems. Opting out of all coverage may not be the last resort, as your state could sponsor a low-cost insurance program to help you secure an affordable policy.

Who Provides Coverage?
The government does not provide you with coverage per se; rather, it works with insurance companies in your state to execute the program. You work directly with the insurance carrier to secure the policy where they facilitate enrolling you into the government program. Make sure you are fully informed regarding the insurance company’s policies for maintaining coverage; enrollment in these types of programs may subject you to different requirements than a customer with a standard policy.

Income is the largest factor in determining eligibility, but no blanket guidelines apply. Different states will apply different criteria. In California, your income cannot exceed 250 percent of the federal poverty level for household size. For example, a single person cannot make more than 27,225 dollars while a family of four cannot exceed 55,875 dollars. New Jersey applies the same financial requirements as it does when qualifying for its Medicaid program. There may or may not be other qualifying factors, such as driving history and value of your vehicle not exceeding a certain amount.

Coverage Offered
Due to the lower cost, these plans will typically offer less coverage, in terms of dollar amount and specific types of coverage available, such as collision and underinsured/uninsured drivers. Plans usually provide coverage for liability – when you are at fault – and property damage. Coverage will likely be similar to state minimums for standard policies or possibly even less.
Medical coverage may or may not be included. New Jersey, for example, will typically provide up to 15,000, but may pay out up to 250,000 for serious injury, including but not limited to, disfigurement, brain damage and spinal injuries.

Because government-sponsored car insurance is provided at the state level, there are no set rates that apply nationwide and car insurance costs can vary significantly by state. Costs may be the same statewide or vary within regions. In California, for example, the premium is determined by county and ranges anywhere from 248 to 348 dollars per year.