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Dave Ramsey's 5 best car insurance tips for 2026

By Laura Rodini TheStreet

Updated June 18, 2026 9:37 AM

According to Experian, the average annual auto insurance premium in 2026 is $2,276, over 50% higher than it was in 2020. Rising repair costs, widespread inflation, and supply chain bottlenecks are to blame - and it's unlikely premiums will ever fall back down to their pre-pandemic levels.

Personal finance expert and popular podcaster Dave Ramsey has made it his life's work to help people get out of debt and build lasting wealth, but insurance is one corner he never advises cutting. "Insurance isn't a baby step," he frequently tells his listeners, which means that, regardless of where someone is on their financial journey, having insurance is a necessary expense.

Fortunately, drivers don't have to choose between having coverage and saving money. By doing a little extra legwork, it's possible to lower your insurance costs while staying on track with your financial goals.

Here are the five strategies he recommends.

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1. Always shop around

"Shopping for quotes is a very effective way to get cheaper car insurance," Ramsey writes on his website, Ramsey Solutions. "Maybe you've got a new car, a paid-off car, an old beat-up car that would be totaled if you bumped into a mailbox - any changes to your car situation mean it's a good time to shop around."

The way to do this, Ramsey says, is to use an independent insurance agent who will do the shopping for you. He even compiled a list of vetted agents you can use (who earn a commission when your policy is written).

For example, one of Ramsey's community members, Savannah L., saved $35 per month compared to her previous insurer by paying for a year's worth of insurance in a single payment.

2. Ask for discounts

"If you don't ask for a discount, you won't get one," Ramsey wisely says. He wrote an entire blog post on how to haggle, and insurance is on his list of things you can bargain for.

Ramsey encourages drivers to contact their insurer to see which discounts they qualify for, such as maintaining a safe driving record, bundling policies, low mileage discounts, military and student incentives, and even for choosing paperless billing.

Stack a couple of these discounts together, and they could really add up.

Community member Melissa B. credits discounts for the lower insurance rate she has over her friends', even with two teenage drivers. "We have lots of discounts - good driver, multi-line discount, honor roll deduction, driver's ed deduction, no-paper discount," she said, adding, "My boys watched a video and got another discount!"

3. Raise your deductible

By increasing your deductible, you'll lower your monthly car insurance premium, but this tip only applies to those who are following Ramsey's Baby Steps plan, a 7-step blueprint for achieving financial freedom. It requires people to build multiple funds for emergencies, including a $1,000 "starter fund" for unexpected annoyances, like flat tires and broken windows.

Once that's in place, Ramsey recommends putting away 3–6 months of expenses into a "fully funded" emergency fund as a safety net in the event you lose your job or experience a major appliance malfunction.

Ramsey believes the reason it's important to have these savings accounts in place before you raise your car insurance deductible is that, in the event of an accident, you could end up paying more out of pocket.

The example he uses is that, if you have a $500 deductible and get into a fender bender that costs $2,000 to repair, you're liable to pay $500 while your insurance company pays $1,500.

If your deductible is $1,000, then you'd pay a grand.

"Once you're debt-free and have your fully funded emergency fund, you can afford to take on more risk, so you can set your deductible higher," Ramsey explains.

4. Don't pay for coverage you don't need

This may seem like a no-brainer, but people often forget that, as their cars get older, collision coverage may cost more than the car is actually worth. So, he recommends drivers review their policies carefully to make sure they are not paying for unnecessary coverage.

For example, community member Devon J. dropped comprehensive and collision coverage from the policy for his 20-year-old Camry because it was adding hundreds of dollars to his annual premium for a maximum payout of just $500.

More on Dave Ramsey:

"The goal isn't to get the cheapest insurance possible," Ramsey writes. "The goal is to get the best coverage for your budget."

That being said, there is one thing he doesn't ever want drivers to cut back on - and that's liability insurance. He recommends carrying at least $500,000 in liability coverage, so that you're covered from repair and medical bills in the event of an accident.

5. Buy a car that costs less to insure

"This one's simple math," Ramsey says, "The more your car is worth, the more it costs to replace or repair it after a wreck."

He recommends shopping for a used car because they are cheaper to replace in the event of an accident.

He also wants new car buyers to beware of add-ons, such as luxury, sport, or "special edition" packages, that could send insurance premiums skyward.

And he always recommends car buyers invest in the latest safety features and technology - not only to keep your family safe, but also to help lower your insurance rates.

Before you sign on the dotted line, Ramsey suggests calling your insurance company to find out exactly how much your new car will cost to be insured.

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This story was originally published June 18, 2026 at 9:23 AM.

1. Always shop around

2. Ask for discounts

3. Raise your deductible

4. Don't pay for coverage you don't need

5. Buy a car that costs less to insure

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