Rachel Bodine graduated from college with a BA in English. She has since worked as a Feature Writer in the insurance industry and gained a deep knowledge of state and countrywide insurance laws and rates. Her research and writing focus on helping readers understand their insurance coverage and how to find savings. Her expert advice on insurance has been featured on sites like PhotoEnforced, All...

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Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products including home, life, auto, and commercial and working directly with insurance customers to understand their needs. She has since used that knowledge in her more than ten years as a writer, largely in the insurance...

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Reviewed by Leslie Kasperowicz
Former Farmers Insurance CSR

UPDATED: Oct 30, 2020

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Dave Ramsey is a financial guru who has helped millions of Americans improve their financial futures. Although he is best known for his debt management strategies, Dave Ramsey also has opinions on everything from car insurance to college loans. Dave Ramsey home and auto insurance tips can easily be found on his website.

How much auto insurance does a financial expert like Dave Ramsey recommend? Today, we’re looking at Dave’s car insurance advice, including the types of car insurance policies Dave Ramsey recommends and how much coverage you should have. Understanding auto insurance and how much you need is important, so read on.

Read on for more information about Dave Ramsey’s auto insurance recommendations. There are no Dave Ramsey auto insurance quotes, but we can help with that.  Get quotes now by using our helpful comparison tool.

Dave Ramsey and Car Insurance

Many are curious about Dave Ramsey’s insurance recommendations. Dave Ramsey has published several detailed guides on car insurance. You can view those guides on DaveRamsey.com, where Dave covers topics like, “How Much Car Insurance Do You Really Need” and “Basic Insurance Policies Everyone Needs.”

Dave Ramsey has spoken plenty about how much car insurance individuals should have. Here are some of the most important beliefs, opinions, and tenets Dave Ramsey has about car insurance. So how much car insurance do I need per Dave Ramsey?

“The Primary Purpose of Insurance is to Transfer the Risk of Financial Loss from You to Your Insurance Company”

Dave Ramsey is famously cautious. Most of his financial advice revolves around the idea of avoiding debt. He introduces most of his car insurance advice with the following sentiment:

“The primary purpose of insurance is to transfer the risk of financial loss from you to the insurance company.”

Car insurance covers unexpected circumstances — like an accident where you roll your brand new $50,000 SUV. Most of us cannot afford to cover the cost of replacing a $50,000 SUV out of pocket, which is why we buy car insurance (obviously, there are also state auto insurance requirements).

If you’re wondering, “What type of insurance does Dave Ramsey recommend?” then read on.

Dave Ramsey Recommends a $1,000 Deductible

In multiple discussions on car insurance, Dave Ramsey has specifically recommended a $1,000 car insurance deductible:

“We recommend a $1,000 deductible because that usually means you’ll pay a lower premium.”

When you have a lower deductible, your car insurance company views you as a higher risk. You are more likely to make a claim.

When you have a higher deductible, you are a lower risk, and you are less likely to make a claim, which is why you pay lower insurance premiums.

However, Dave Ramsey cautions that higher deductibles are not a great deal with every insurance company. Some companies only reduce your annual premiums by $50 when you increase your deductible by $500, which means you need to go 10 years without an accident to break even.

“Before you sign up for a $1,000 deductible, however, work with your insurance agent to make sure it’s worth the extra risk by conducting a break-even analysis as you compare rates.”

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Dave Ramsey Recommends Having At Least $500,000 Worth of Coverage

When asked how much auto liability insurance drivers should have, Dave Ramsey typically recommends at least $500,000 worth of coverage:

“So how much liability insurance should you have? That can be answered in two words—a lot! Even if your state doesn’t require liability insurance, it’s a good idea to have at least $500,000 worth of coverage that encompasses both types of liability coverage—property damage liability and bodily injury liability. That way you’re covered for costs related to getting the other driver’s car fixed (property damage) as well as costs related to their lost wages or medical bills (bodily injury) that resulted from an accident where you’re at fault.”

An ideal Dave Ramsey-approved insurance policy might be expressed as 250/500/250, indicating you have $250,000 of bodily injury coverage per person, $500,000 of bodily injury coverage per accident, and $250,000 of property damage coverage per accident.

To see what Dave Ramsey says about an umbrella policy, read the section below.

Upgrade Liability Coverage as Your Net Worth Increases

Dave Ramsey claims that everyone should have $500,000 of liability coverage regardless of their net worth. However, he also believes you should increase your liability coverage as you build more wealth:

“The more wealth you build, the more you also want to get a liability umbrella policy that attaches to the top of that policy and keeps going for another million dollars. And that’s only a couple hundred dollars a year.”

Umbrella policies can extend your coverage to $1-$2 million and higher.

Dave Ramsey Recommends Comprehensive Coverage on New and Old Vehicles

Dave Ramsey believes comprehensive coverage is a smart, low-cost investment for drivers with newer or older vehicles:

“Like liability insurance, comprehensive coverage is inexpensive—so you’ll want to have it whether you’re driving a beater or a brand-new car.”

Comprehensive coverage covers storm damage, hail damage, certain natural disasters, thefts, vandalism, fires, and more.

“Insure for What Could Financially Devastate You, Rather Than What Inconveniences You”

Some people buy too much insurance. They purchase insurance to cover unexpected expenses of $1,000 or $2,000, for example, when in reality, a self-insured emergency fund might work better in this situation.

Here’s how Dave Ramsey explains the idea in one of his articles on car insurance:

“A good rule of thumb is to insure for what could financially devastate you, rather than what inconveniences you.”

Dave Ramsey mentions this advice specifically when talking about a disappearing deductible, where you pay extra money today in exchange for having your deductible drop by $50 or $100 every year you go accident-free. In Dave Ramsey’s opinion, disappearing deductibles are rarely a good deal.

Check out the table below for average annual auto insurance rates in the United States.

Average Annual Auto Insurance Rates by Coverage Type
Coverage TypesAverage Annual Rates
Comprehensive$148
Collision$323
Liability$538
Commercial$900-$1,700
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As you can see, there’s a major difference in price between auto insurance coverage types.

Dave Ramsey Does Not Recommend Uninsured and Underinsured Motorist Coverage

Interestingly, Dave Ramsey does not recommend uninsured or underinsured motorist coverage (unless your state requires them). He acknowledges that one in eight Americans drive without car insurance. However, he claims most drivers don’t need this coverage:

“If UM, UIM and UMPD coverages aren’t required by your state, they’re likely not something you need to add to your auto insurance policy if you already have health insurance and collision coverage in place.”

Take Advantage of Insurance Discounts

Dave Ramsey recommends telling your insurance agent about every possible feature on your vehicle, including safety features and security devices. He also suggests telling your insurance agent about your family situation, including any teen drivers you have at home. When you tell your insurance agent all of this information, you get the most accurate insurance policy while also taking advantage of all available discounts.

“Countless factors affect the type of insurance you need and the premium you’ll pay … your insurance agent needs to know [certain information] to not only pick the right policies for you but to also save you some hard-earned money in the long run!”

Dave Ramsey’s Endorsed Local Providers (ELPs) List for Car Insurance Agents

Dave Ramsey has an Endorsed Local Providers (ELP) list for car insurance agents. Dave recommends only working with insurance agents on his ELP list.

How did they become Dave Ramsey approved insurance agents? These agents, according to Ramsey, shop hundreds of companies to find the best deals. They also find customized auto insurance that works for your needs.

Of course, each insurance agent pays Dave Ramsey a membership fee to be on the ELP list, so it makes sense that he’s recommending them.

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Dave Ramsey Car Insurance Recommendations: The Final Word

Dave Ramsey has helped millions of Americans improve their finances. If you trust Dave Ramsey’s financial advice, then you might appreciate his car insurance advice as well. What does Dave Ramsey say about car insurance? Maintain at least $500,000 of liability coverage, skip unnecessary optional policies, and get comprehensive coverage on new or old vehicles. For more information, check out Dave Ramsey’s car guides. The daveramsey.com blog also offers plenty of useful information.

Frequently Asked Questions: How Much Auto Insurance Does Dave Ramsey Recommend?

1 – What other types of insurance does Dave Ramsey recommend?

Dave Ramsey has given advice about many different types of auto insurance. If you want to find out about Dave Ramsey’s health insurance recommendations, then do a quick search on his page. You’ll find Dave Ramsey’s home insurance tips, health insurance tips, and more.

2 – Does Dave Ramsey offer tips on buying a car?

On his site, Dave Ramsey has car buying guides and much more information on buying both new and used cars. Dave Ramsey also covers how to save for a car.

Dave’s car insurance recommendations can help you find a good policy. To compare rates from companies in your area, use our comparison tool.