Buying cheap auto insurance can be a great way to save money, but it can expose you to various financial risks. By choosing the cheapest insurance option available, you may be sacrificing important coverage that would offer a financial cushion in the event of an incident. Luckily, you don't have to spend a lot of money on auto insurance to get enough coverage. Below are some tips for saving on auto insurance without increasing your financial risk. 

Work on Your Credit Score

Many insurance companies use credit scores to determine a customer's risk profile and calculate premiums. A low credit score is usually associated with an increased likelihood of filing claims. If you have a low credit score, your insurance company will classify you as a high-risk driver and charge you more for car insurance. Therefore, improve your credit score to save money on car insurance premiums. Pay your bills on time, repay outstanding debt, and avoid taking out unnecessary credit cards. These measures will help increase your credit score and improve your risk profile. 

Determine the Coverage You Need

You can save money on car insurance by choosing the right coverage for your needs. You can opt to carry only your state's minimum liability insurance or purchase additional coverage. Here are a few factors to help you determine the right coverage for your needs.

• Value of your vehicle: If your car is fairly new, consider comprehensive coverage to cover it against risks such as theft, fire, vandalism, and natural disasters. However, if your car is old, you can save money by forgoing comprehensive coverage.
• Driving habits: If you drive a few times over short distances, you can opt for the minimum liability coverage and forgo additional cover to save money. However, if you regularly drive over long distances, opt for higher liability coverage to avoid financial risks.
• Financial situation: Can you cover huge repair costs and medical expenses out of pocket after an accident? You can take out a higher deductible to save money on premiums. However, if you have limited savings, invest in more coverage. 

Ensure you get adequate coverage to avoid suffering a financial burden after the occurrence of an uninsured risk. 

Opt for Usage-Based Insurance 

Usage-based insurance differs from traditional auto insurance because it uses real-time data to determine your insurance premiums. This type of insurance collects data from your car's technology to track driving behavior, such as speed, acceleration, braking, and cornering. It also monitors when you drive your vehicle and whether you use your mobile phone while driving. The data derived from your habits is used to calculate your premiums. If you have excellent driving habits, you will pay lower premiums and get discounts on your policy.

Seek multiple quotes from different reliable companies and choose a policy that strikes a balance between affordability and adequate protection.