Do You Have the Right Car Insurance?

Drivers often miss out on the best deals. Here’s how not to make that mistake.

Drivers often miss out on the best deals. Here’s how not to make that mistake
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Extra liability insurance can also be a smart move, particularly for high-net-worth individuals who want to protect their assets. While states require drivers to obtain some level of minimum liability insurance, Salvatore says it often makes sense to take out more than is required, in order to make sure your assets are protected in the event of an accident. "You might consider excess or umbrella insurance that applies $1 million in protection above the underlying limit," she says.

[Read: What Can You Afford: Car, House or Vacation?]

Extended warranty policies, which pay for repairs for vehicles that are no longer covered under manufacturer warranty, can be a more difficult decision. Not everyone agrees that extended warranty policies are a good idea. In general, Consumer Reports cautions against purchasing them. In a survey of 8,000 car owners with extended service plans several years ago, the organization found that 65 percent said they spent more on the contract than they got back on cost-savings. About 4 in 10 respondents said they never used the extended warranty policies at all because they didn't need them.

Russ Carpel, co-founder and CEO of ForeverCar.com, which offers extended warranties, says the policies give drivers peace of mind of knowing that if something happens to their car after the manufacturer warranty expires, they're still covered.

"Some people might put off making repairs, or even worse, have a repair they can't afford to fix. If you have a vehicle service contract, you could get it done," Carpel says.

Whatever final policy options you choose, you might want to consider also getting your homeowners, life and other insurance policies from the same company, because providers will often cut you a deal if you take out multiple policies from them.