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So you're thinking about buying a car. You've got money saved, and you know what kind of car you want. But wait a second!!! Did you remember to factor in the cost of car insurance?

Most states require you to have at least liability insurance if you own a registered vehicle. This insurance covers damages caused to another car if you are involved in an accident and it is determined to be your fault. Driving without insurance is a crime in most states.

Having liability insurance does not mean you will not have to pay for fixes to your car if you are involved in an accident. You will need to buy collision insurance if you want that kind of protection. Even with collision, you will probably have to pay a deductible each time you make a claim on your collision insurance. For instance, let's say you fell asleep and crash into a ditch. The damage to your car is estimated at $5,000. If your deductible is $300, you will pay $300 and your insurance company will pay the rest. Chances are your insurance (both liability and collision) will go up as a result of this accident. This is why it's important to avoid accidents as much as possible.

There are many ways you can save money on your car insurance. Like I already said, you should avoid accidents, which will drive up your premiums (the amount you pay for insurance). If you have a classic car, and you do not drive it as much as a normal car, you may be eligible for classic car insurance.

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People under the age of 25 will tend to have premiums much higher than older adults, so they should be looking for various other ways of saving. If you are a good student (B or better average) you may be eligible for a discount (State Farm is one company that offers this). You can also take defensive driving, which many insurance companies reward with another percentage savings off premiums. Some companies also offer other educational materials that you read and complete in your spare time and return to them for another savings. Finally, some companies offer a multiple line discount. This means if you have another insurance policy with them, you can save money on your car insurance. Some companies offer a really cheap form of health insurance, similar to Aflac, which pays you a flat amount if you are hurt and miss work. The cost of this health insurance is often less than the multiple line savings on your car insurance. With all these discounts combined, you will find your insurance premiums can be made very reasonable.