The Auto Coverage You Need (and What You Don't).

People ask me all the time how to save on their car insurance because we all have this vague sense that car insurance is ripping us off. Well, in most cases it's not. There's a few things you can do to cut costs on it and I'll give you a couple of tips here. Number one thing you want to do is don't lower your liability. Liability insurance is the best buy out of all the brackets within the things you buy inside car insurance. It's the least expensive for the coverage you get. If something really bad happens, this is what you need insurance for is to take care of the other party if you do damage to them or to their vehicle or something like that. Liability insurance is a good buy. Don't cut on that. You need collision insurance to replace your car if you're in baby step two because you don't have the money to go out and buy a car. You keep your insurance coverages in place. One thing you can do is you can raise your deductible. The way you want to look at that is how much does it save you versus the amount of risk you're taking. If you're going from a $250 deductible to $1,000 deductible, you're increasing your risk by $750. Now, if that saves you $75 a year, it would take you 10 years without having a wreck to break even. No, no, no, no, no. We're not doing that one. If it saves you $300 a year, it takes you about two and a half years to get money back. That one I'm doing. A third thing you can do to save money on your car insurance is always buy all insurance with a broker. An insurance broker that shops several different companies to get you the best possible buy anywhere. A captive agent like a state farm or a nationwide, they only can sell one brand. They're always going to tell you they got the best deal whether they do or not. Sometimes they do. Most of the time, they don't. Most people save hundreds of dollars a year when they do that. The last thing on saving on car insurance, especially when you're a baby, step two is don't buy a cool beater. Nobody's excited. This is your grandma's car kind of thing. This is a get-by car. We're going to drive like no one else, so later we can drive like no one else. Raise your deductible. Shop around by using a broker. Beware what type of car you buy if you're moving down in car into the beater land in order to get out of debt and that kind of stuff. That'll save you big time on insurance.