How Much Auto Insurance Coverage Does Dave Ramsey Recommend?

 

Dave Ramsey's Advice on Choosing Auto Insurance Coverage

When it comes to auto insurance, Dave Ramsey recommends going with as high of deductibles as you can afford. The higher your deductibles, the lower your premiums. Dave says to aim for at least $1,000 deductibles, but if you can swing $2,500 or $5,000 deductibles, even better.

Dave also suggests dropping collision and comprehensive coverage on older cars. If your vehicle is worth less than $3,000 according to Kelley Blue Book, the premiums you're paying for full coverage likely exceed what the insurance company would pay out if your car was totaled. In that case, it makes more sense to drop to liability only.

Liability coverage is the most important part of your auto policy. This covers injuries and damages to other vehicles if you cause an accident. Dave recommends carrying at least $250,000 per person, $500,000 per accident in bodily injury liability and $100,000 in property damage liability.

Additional tips from Dave:

• Shop around at different companies to compare rates. You can save hundreds per year by switching.

• Raise your credit score. Insurance companies use credit-based insurance scores to determine premiums. The higher your score, the lower your rates.

• Ask about discounts for bundling home and auto, good student, anti-theft, etc.

• Consider dropping roadside assistance and rental reimbursement to save money. You can use your own towing coverage or pay out of pocket if needed.

Following Dave Ramsey's advice on choosing proper auto insurance coverage and shopping around can help ensure you have adequate protection without overpaying. Reviewing your policy details annually is a smart money move.

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How to Get the Best Car Insurance Rates According to Dave Ramsey

Dave Ramsey, the personal finance guru, recommends several tips for getting the best auto insurance rates.

First, shop around at different companies. Compare quotes from major insurers like Geico, Progressive, State Farm, and Liberty Mutual. Check independent agents and brokers who can compare rates from multiple companies at once. See if you can uncover lower premiums for the same coverage.

Second, raise your deductibles. The higher your deductibles, the lower your premiums will be. Ramsey suggests deductibles of at least $1,000 or even $2,000 if you have an emergency fund to cover it. Make sure you can afford the out-of-pocket costs in case of an accident before opting for high deductibles.

Third, drop unnecessary coverage. You don’t need collision insurance on older vehicles. Drop it for cars worth less than $4,000. You also don’t need rental car coverage, roadside assistance, or mechanical breakdown insurance. These add-ons just increase your premiums.

Fourth, ask about discounts. Inquire about discounts for safe drivers, students, anti-theft devices, bundling with home insurance, and more. Make sure you’re getting all the discounts you qualify for to maximize your savings.

Fifth, increase coverage limits and amounts as income allows. While you're striving to lower premiums, also make sure you have adequate protection. As your income rises, increase limits for liability, uninsured motorists, and comprehensive coverage.

Following these useful tips from Dave Ramsey can help you uncover the lowest car insurance rates while still maintaining sufficient coverage for your needs.

READ ALSO: How to Get the Best Deal on USAA Auto Insurance

Answering Common Auto Insurance Questions Using Dave Ramsey's Tips

Dave Ramsey, the popular money guru, has some sage advice when it comes to auto insurance.

His main tips can help answer some of the most common questions people have about their car insurance.

1. How much coverage do I need?

According to Ramsey, you should get enough liability coverage to protect your assets in case of an accident. That usually means at least $250,000 per person and $500,000 per accident. Your exact needs will depend on your financial situation and the value of your vehicles.

2. Should I get comprehensive and collision coverage?

Comprehensive and collision coverage pay for damage to your own vehicle. Ramsey recommends dropping them if your car is worth less than $2,000-$3,000 since the premiums often cost more than you'll get in return. For pricier vehicles, keep the coverage and increase your deductibles to lower premiums.

3. When should I drop full coverage?

If your vehicle is paid off and worth less than 10% of your annual income, you can consider dropping full coverage insurance. For most people, that means when your car is worth $3,000 or less. At that point, the cost of insurance likely outweighs the value of the vehicle. You can save money with liability-only coverage.

4. How can I lower my auto insurance premiums?

Some of Ramsey's tips for lowering premiums include:

• Raise your deductibles. The higher your deductibles, the lower your premiums.

• Drop unnecessary coverage like roadside assistance or rental car coverage.

• Bundle your auto policy with other policies like home or life.

• Improve your credit score. In most states, credit score affects your auto premiums.

• Ask about any discounts for safe drivers, students, anti-theft devices, etc.

• Shop around at different companies. Comparing quotes from multiple insurers can save you hundreds per year.