Most states require drivers to have some amount of auto insurance. For example, someone residing in California will definitely need to look up the best auto insurance in California for their vehicle. But what if you’re trying to cut your expenses? You’ll be glad to know that it’s easy to reduce the cost of car insurance and still comply with the law.

In this episode you’ll learn 5 of the best ways to save money on auto insurance while keeping the coverage you need to stay safe and protect your finances..

Before we get into savings tips, it’s important to understand what’s covered by a basic auto insurance policy. Car insurance is actually a package of 6 different types of coverage that are each priced separately:

Collision coverage pays to repair your vehicle when you have an accident with another car-even if the crash is your fault.
Comprehensive coverage pays to repair your vehicle or reimburse loss that occurs due to something other than a collision, like fire, flood, vandalism, hitting an animal or even hail damage with calling in Hail Specialists to repair it.
Property damage coverage pays for damage you cause to someone else’s car or property, such as a mailbox, fence, or building.
Bodily injury liability coverage pays for injuries that you cause to someone else.
Medical payments or personal injury protection (PIP) coverage pays for any injuries that you or the passengers of your vehicle have due to an accident. It can cover a variety of expenses, like medical treatment, lost wages, and funeral expenses.
Uninsured and underinsured motorist coverage pays when you’re in an accident with a driver who doesn’t have auto insurance. It also covers you in a hit-and-run situation or when an at-fault driver has insurance, but not enough to cover your loss.

Tip #1: Assess Your Insurance Needs
Now that you know the specific coverage that auto insurance gives you, carefully assess what you need. For instance, if you don’t have ample savings to repair or replace your car if it were destroyed or stolen, then you definitely need collision and comprehensive.

But if you have an older car that’s paid for, then consider dropping collision and comprehensive. A good rule of thumb is not to buy those coverages unless the annual premium is 10% or less of your car’s Blue Book value. Otherwise you’ll pay more in premiums than you could ever collect in benefits.

However, no one should go without liability and injury coverage because if you’re in a serious car accident you could be sued for a huge amount of money. Each state has minimum requirements for how much liability coverage you must have-but it’s possible that you may need more.

For instance, if you live in Florida, your insurance must pay up to:

$10,000 to cover medical costs for each individual injured, or up to a $20,000 limit per accident
$10,000 for property damage liability
$10,000 for personal injury protection per person
These are very low limits that aren’t likely to protect your assets, like real estate, savings, and investments, if you’re found at fault in a lawsuit. So never scrimp on liability coverage because that’s where insurance really gives you a strong financial safety net.

Tip #2: Maintain Good Credit and a Clean Driving Record
You might be surprised to know that your credit plays a big factor in the rates you’re quoted for car insurance. Insurers use credit scores as a tool to help gauge how risky a customer might be. So that’s just one more reason to maintain good credit scores by paying your bills on time and managing credit accounts responsibly.

When it comes to ways your premium can be affected, your driving record would probably be one of the most important factors to consider. Car insurers use your driving record in order to gauge risk and set premiums. Having multiple moving violations and accidents on your motor vehicle record generally will cause you to pay higher insurance premiums. This is something that you don’t want to happen, but if you can’t avoid the eventuality of having to pay more for your insurance, then if you’re able to find car insurance with convictions, the amount that you’ll have to pay for your insurance premiums can be significantly reduced. There is always something that you can do, and starting by driving sensibly may be a good place to start.

Tip #3: Raise Your Deductible
A deductible is the amount of money you must pay before insurance benefits begin. For auto insurance, you typically can choose a deductible such as $200, $500 or $1,000. The higher your deductible the lower your premium will be.

But the tradeoff with a higher deductible is that if you have a car accident, you’ll have to pay more of the repair cost out of your own pocket. So never raise your deductible unless you’re confident that you’d have enough cash to cover it if you ever needed to make a claim.

Tip #4: Ask About Discounts
Insurance companies offer a variety of discounts, but they don’t always advertise them. So speak up and ask how you might qualify for a lower premium.

For instance, you typically get a significant discount for purchasing multiple polices with the same insurer, such as your auto and renter’s insurance, or having more than one car insured.

You’ll also get discounts for:

driving a car with safety features, like anti-lock brakes or airbags
having a good driving history with few or no accidents
being a student with a high grade point average
working in certain occupations, like medicine, education, or engineering
completing a defensive driving or accident prevention course
serving in the military
Tip #5: Shop Regularly
It’s important to shop most types of insurance policies on a regular basis, like once a year. So, if you’ve never shopped your auto insurance, or it’s been a while, don’t put it off any longer because you’re probably leaving money on the table.

After comparing quotes, you may find that your current insurance provider is giving you a great deal-but you won’t know until you shop at least several different companies.

The easiest way to shop is online, using a free site like insurancequotes.com or carinsurancequotes.com. They allow you to get multiple quotes at once from the nation’s top insurance providers and save a lot of time and hassle.

Shopping for car insurance probably isn’t something you look forward to doing each year. But since it helps many people cut their expenses, I promise that it’s well worth the effort.