When it comes to managing money, Dave Ramsey is one of the most trusted voices in America. He’s known for helping people get out of debt, save money, and build financial stability. One area where his advice stands out is car insurance. Dave Ramsey’s car insurance tips are practical, simple, and focused on saving money while staying properly covered.
In this article, we’ll break down Dave Ramsey’s car insurance advice, what types of coverage he recommends, how to lower your premiums, and how his approach can help you make smarter financial decisions.
Who Is Dave Ramsey and Why His Car Insurance Advice Matters
Dave Ramsey is a personal finance expert, radio host, and author of books like The Total Money Makeover. He teaches people how to take control of their finances through budgeting, debt elimination, and smart spending habits.
When it comes to car insurance, Dave Ramsey believes in being financially responsible — meaning you should protect yourself with proper coverage but avoid wasting money on unnecessary add-ons. His approach is all about value over price: don’t just pick the cheapest policy; choose the one that gives you solid protection at a fair cost.
What Dave Ramsey Says About Car Insurance
Dave Ramsey’s view on car insurance is straightforward — you need it, but you need to understand it before you buy it. He recommends that everyone review their policies regularly and make sure their coverage fits their financial situation.
Here’s what Dave Ramsey recommends for car insurance:
- Always carry liability insurance.
Liability coverage pays for injuries and property damage if you cause an accident. Dave Ramsey emphasizes that this is non-negotiable. - Don’t skip uninsured motorist coverage.
If someone hits you and doesn’t have insurance (or enough of it), this coverage protects you from paying out of pocket. - Get comprehensive and collision coverage if your car is new or valuable.
If your car is worth more than you could afford to replace, he recommends keeping full coverage. - Drop full coverage on older cars.
Once your car’s value drops below about $1,000 to $2,000, Dave says it’s not worth paying for full coverage. The payout you’d receive after a wreck likely won’t be worth the extra premiums. - Use a high deductible to lower your premiums.
A higher deductible (like $1,000 instead of $500) means you’ll pay more if an accident happens, but your monthly insurance bill will be lower.
Dave Ramsey on How Much Car Insurance You Should Have
Dave Ramsey recommends that drivers carry at least $500,000 in liability coverage per accident. While that might sound like a lot, he argues that it’s better to be overprotected than underinsured.
He also suggests avoiding state minimum limits, because those amounts are often too low to cover serious accidents. If you only have the minimum, you could end up paying thousands of dollars out of pocket if damages exceed your coverage.
Ramsey’s golden rule is:
“Insurance is to protect you from things you can’t afford to pay for yourself.”
That means if you could easily replace your old car, skip unnecessary coverage. But if you’d struggle to replace it or pay medical bills from an accident, you need stronger coverage.
Why Dave Ramsey Hates Paying for Extras
Dave Ramsey is very clear about what he calls “insurance you don’t need.” He believes some add-ons sound nice but aren’t financially smart. Here are some he says to skip:
- Rental car reimbursement: Not worth it if you have an emergency fund to cover a short-term rental.
- Roadside assistance: You can get this cheaper through a motor club or even your credit card.
- Gap insurance: Only needed if you owe more on your car than it’s worth. Once you’ve paid it down, cancel it.
His main message: Don’t let insurance agents upsell you on extras that don’t actually protect your finances.
Dave Ramsey’s Tips to Save Money on Car Insurance
Dave Ramsey’s approach to saving money on car insurance is all about being proactive and informed. Here are his key strategies:
- Shop around regularly.
Compare quotes every year or two. Insurance rates change, and loyalty doesn’t always pay off. - Ask for discounts.
Look for multi-car, good driver, and bundling discounts (especially if you combine auto and home insurance). - Drive safely and maintain a clean record.
Tickets and accidents can spike your premium for years. - Consider dropping full coverage on older vehicles.
Once the car’s worth less than what you’re paying in premiums, drop it to liability-only coverage. - Keep a strong emergency fund.
With savings in the bank, you can afford a higher deductible, which lowers your monthly premium.
Dave Ramsey and the Baby Steps Approach to Car Insurance
Dave Ramsey’s famous Baby Steps program includes insurance as part of his long-term financial plan. Once you’ve built an emergency fund (Step 3) and started investing (Step 4), having the right insurance ensures that your financial progress isn’t destroyed by one accident.
He often says that insurance is a shield — it doesn’t make you rich, but it keeps you from losing everything when life hits hard.
So, while he encourages cutting costs, he never tells people to go without insurance. Instead, he teaches how to buy smarter, not cheaper.
Dave Ramsey’s View on Buying Car Insurance Online
Dave Ramsey supports using online tools and independent insurance agents to find the best deals. He often promotes Endorsed Local Providers (ELPs) — licensed agents who align with his financial principles.
These agents are not tied to one insurance company, so they can shop around for you and find the best coverage at the best rate. Ramsey believes this hands-on, comparison-based approach leads to smarter financial decisions.
Is Dave Ramsey’s Car Insurance Advice Right for You?
Dave Ramsey’s car insurance advice works well for most drivers, especially those looking to save money and avoid financial mistakes. His focus on liability protection, affordability, and eliminating unnecessary coverage helps people stay financially safe without overspending.
However, it’s important to personalize his advice. For example, if you have a luxury vehicle or live in an area with high accident rates, you may need more coverage than the basic recommendations.
Ultimately, Ramsey’s message is about balance — being protected, not overinsured.
Final Thoughts on Dave Ramsey Car Insurance
Dave Ramsey’s car insurance philosophy makes sense for everyday drivers. He reminds us that insurance isn’t about being cheap — it’s about being wise. You don’t need to buy everything an agent offers, but you do need enough coverage to protect your savings and family.
If you apply Dave Ramsey’s car insurance advice, you’ll likely find yourself spending less on premiums while still being fully covered. It’s all about knowing what you’re paying for, cutting out what you don’t need, and making sure your coverage truly fits your life.