If you're young and have only a few assets to protect, don't be frightened into buying more auto coverage than you need. On the other hand, don't base your car insurance decision solely on cost, either.

For example, you may not be able to afford $300,000 of liability auto insurance. Don't panic. Keep in mind that large liability settlements — in the tens of thousands of dollars — are few and far between. If you're just starting out on your own, you may not have substantial assets, such as a home or an expensive car, to protect. Still, you should know that a liability judgment against you could result in a garnishment of wages, meaning you could be paying off a settlement for years to come.

If you do have assets to protect, evaluate your financial situation carefully. If you're married, have children or have been able to save money on a regular basis, minimum liability limits won't be adequate for you. Generally, if you have large investments and you cause a serious accident, low liability limits could make your investments vulnerable to injured parties suing for damages. Once your car insurance limits are exhausted, the injured party can come after you personally for the rest of the damage you caused.

Strategic savings options

If you're single and under the age of 25, you can expect to pay more for your car insurance than anyone else under age 70. That's because younger drivers are among the riskiest drivers on the road. According to the Insurance Information Institute (III), young people between the ages of 15 to 20 have the highest rate of fatal crashes relative to other age groups — including the elderly.

To offset the cost of your insurance expense, you can lower your premium by raising your deductibles for comprehensive and collision coverage, taking a defensive-driving course (if your insurer offers a discount for that), taking public transportation to work (less annual mileage means lower premiums), buying a homeowners or renters insurance policy from the same company that insures your auto or buying a safer car.

Vehicles with front and side airbags and antilock brakes will generally be cheaper to insure than cars without. Automatic seatbelts and daytime running lights are other safety features for which insurance companies might give discounts. Taking advantage of insurance discounts offered through your employer could also save you a few dollars.

If you own an older vehicle, you could drop collision and comprehensive coverages from your policy. Collision insurance pays if you crash your car. Comprehensive coverage pays if your car is stolen, vandalized or catches on fire. Both of these coverages require you to pay a deductible if you file a claim and, if you have an older car with little value, your insurance payment may be next to nothing after you pay your deductible. Save your money by getting rid of insurance that won't pay off.

If you're married, you'll find your auto insurance rates are substantially lower than single folks. The reason? Insurers consider married people to be more "stable" and thus less of a risk.

Another sign of stability turning 25. Most insurers consider that the age of maturity and you can expect a significant decrease in your auto insurance costs.

The total financial picture

To save money, consider other insurance coverages you already have that may be reducndant to certain kinds of auto insurance. For example, if you have health insurance coverage through your employer, you can waive Personal Injury Protection (PIP) — which pays for your medical expenses resulting from an accident — in exchange for a discount in no-fault states.

In exchange for a lower premium, some insurers may allow you to limit medical damages for yourself under your uninsured motorist coverage.

But be careful not to sacrifice adequate insurance coverage for the sake of saving a few extra dollars. For example, if you find yourself injured in an accident by an uninsured motorist and you've got substantial medical bills, you will have to pay those bills out of your own pocket if you do not have enough coverage.