Regardless of what the law in your state dictates, a responsible driver carries a proper amount - and type - of automotive coverage. But how much is that? How much should it cost? And how can we save money when it's time to pay premiums or obtain a new policy?

If you've been shopping for cars on the Internet, or browsing through automotive web sites, you've probably come across a lot of ads from insurance companies. Most likely, you receive solicitations in the mail, too.

"Save big money on car insurance," the ads might insist. "Responsible drivers get big savings."

Is it true? Are you paying too much now for car insurance? Can one of these online or mail-order insurance companies offer you a better deal? And if the price really is tempting, is this new company reliable?

The only answer to these questions is an absolute "Maybe."

Without question, plenty of drivers are not paying the lowest possible premiums for car insurance. Insurance companies are profit-making entities, after all. If you're already a customer, they don't always reevaluate your situation regularly, to make sure you're paying not a penny more than necessary. Nor do they necessarily quote the lowest possible premium rates to every new customer.

Insurance premiums are based on a large number of factors, not all of them related to driving. Some of those factors transcend logic, such as varying premiums depending on your residence address, or according to your occupation.

As a result, certain people wind up paying more than their driving records alone might warrant. For the most part, no company is obligated to sell you insurance at all, much less insurance at a low-budget rate, or even a "fair" price. Only motorists with poor driving records are "guaranteed" to get insurance. In many states, those folks enter a high-risk "pool," whereby all insurers share the risk. Their premiums stretch from high to huge, so you don't want that kind of assurance of coverage.

Even if you're a careful driver with an excellent record, where you live plays a big role. Auto insurance premiums in New Jersey - traditionally the most costly state - can easily be triple the amount paid in the rural midwest. If you live in the inner city, you're virtually certain to be charged higher rates than a person with the identical record who resides in the suburbs, or out in the country.

Even where insurance is mandatory by law, plenty of cars are running around uninsured. State requirements and enforcement vary, but it's often possible to purchase a policy, obtain a "proof of insurance" document - and then simply cancel that policy the next day.

What kind of coverage do you need?

Drivers need to have (or at least consider) the following types of coverage:

+ Liability (for bodily injury or death). This coverage pays claims that result if you injure or kill a person in an incident with your vehicle, and you are deemed at fault. In other words, liability coverage protects the other party involved, whoever that might be.

+ Liability (for property damage). This coverage pays claims for physical damage that your car does to another vehicle, or to some other form of property, in the course of an accident deemed to be your fault.

+ Uninsured motorist. Pays for your (and your passengers') injuries, when an accident is caused by a driver who is not covered by insurance - who has no policy at all.

+ Underinsured motorist. Pays for your (and your passengers') injuries, when an accident is caused by a driver who has insufficient insurance.

+ Medical payments. This pays the medical expenses for yourself and your passengers, when anyone is injured while riding in your vehicle.

+ Collision. Covering your own car, this portion of the policy provides payment for physical damage that's sustained by your vehicle during a traffic accident. As a rule, you would receive payment for needed repairs (or replacement of the entire vehicle), even if the other party has no coverage for property damage.

+ Comprehensive. This provides payment for damage to your car as a result of fire, wind, theft, vandalism, flood, and other non-accident causes.

Deductible Amounts: Collision and comprehensive coverage have a "deductible" figure. You receive no payment unless the damage, or claim, exceeds a specified amount. If you have $1,000 deductible, for example, only a claim for the amount greater than $1,000 will be paid by the insurance company. Anything less is your responsibility. Having a higher deductible reduces the premium cost - often by quite a lot.

If your car is an older model, not worth a great deal, it's usually wise to omit collision and comprehensive coverage completely. Not only are you saving money on premiums, but in case of an incident that results in serious damage or total loss of the vehicle, you would probably receive considerably less than the car is worth to you. That's because insurance companies go by "book" value in determining claim amounts, and the "book" value of older automobiles tends to be tiny.

Even if an insured person has no other coverage, they carry liability and property damage coverage. This can be obtained in a minimal amount (whatever is required by law in your state), or for considerably larger sums. State law might require as little as $15,000 per person, $30,000 per accident, and $10,000 property damage coverage - dubbed 15/30/10 in insurance lingo. Nowadays, $10,000 in property-damage protection doesn't go far if you're involved in an incident with a BMW or Jaguar. And lawsuits for injury or death can produce liens far beyond these minimums.

Raising liability coverage to $100,000, or even to a million dollars, doesn't usually cost as much as you might fear. Better to save money on other parts of the policy than to skimp on liability, and put all your personal assets at risk.

Medical payment coverage might not be needed at all, if you and your regular passengers are adequately covered by conventional medical (health) insurance. No point in paying twice for the same, or similar, coverage.

Many states have "no-fault" laws. In that case, an insurance company is obligated to pay for damage to its client's vehicle, no matter who was considered to have caused an accident. In drastic cases, the policyholder might still be permitted to file lawsuits for damages; but as a rule, the legal limits apply.

How rates are established

Insurers rely on three basic types of information to determine how much an applicant will pay for coverage (or whether that coverage will be issued at all, at any price):

1. Personal details: Who you are. They consider your age, your gender, your occupation - and yes, your driving record. But as almost any under-25 driver knows, one's actual driving record isn't necessarily the most crucial factor. Under-25 folks (especially males) have long been charged more because the average incidence of accidents is greater for young people. Insurers invariably look at averages, not individuals. If you fall into a group that can be demonstrated to have a high accident rate, you're out of luck.

2. Where you live. People who live in areas with greater population density get higher rates. Again, it's a matter of averages. Even if your driving habits are vastly more sensible than those of your high-risk neighbors, you'll pay higher rates. Other than moving elsewhere, there's no way around this situation.

3. Loss rates for the type of car you drive. The factors above apply primarily to the liability portion of your policy. This one pertains to the vehicle rather than the driver, and is used mainly to establish rates for collision and comprehensive coverage, as well as for theft losses. You can't do much about the "personal" factors in rate-setting for liability coverage, but you can reduce premium rates by picking a car that costs less to insure.

Like it or not, certain vehicles are known to be markedly more likely to be involved in accidents - for whatever reason. Averages again. Specific vehicles also are known to be more costly to repair than others. Sporty cars and high-performance models, for instance. If you simply must have a Camaro or a Mustang, expect to dig deep in that wallet to pay for insurance. But economy cars also can cost more than the average to insure - not because they're inherently more risky, but because the statistics demonstrate that they are more likely to be involved in mishaps of some sort. Ordinary mid-size and full-size sedans typically cost the least to insure.

Same thing with theft. Police departments and insurers know which vehicles are most likely to be stolen. An insurance-industry group, the Highway Loss Data Institute, tracks the comparative losses that are incurred when various vehicle are stolen. HLDI performs a similar service to compare repair costs.

How can you find out which cars cost more to insure? Certain car models warrant a discount, while others demand a surcharge. Some insurance companies, including State Farm, issue lists of vehicles that demand rates higher or lower than average. The April issue of Consumers Digest magazine contains a chart that indicates comparative insurance costs for each new vehicle on the market. For more complete data, including specific dollar figures for insuring each vehicle model, consult The Complete Car Cost Guide (or The Complete Small Truck Cost Guide), published annually by IntelliChoice. These books are available in most public libraries.

When determining premiums, insurance agents consult a detailed book, full of codes that give the relative costs to insure every vehicle on the market. This book is not available to the general public.

Discounts galore

Discounts (and surcharges) based on the type of car are only one factor in determining total cost of a policy. You might be eligible for one or more special discounts, depending on your personal circumstances:

+ Multi-car. If you insure more than one vehicle with the same company, you generally are entitled to a discount.

+ Non-smoker. Not everyone agrees that non-smokers are necessarily better drivers, but statistics demonstrate a lower level of losses; so they often get a discount on premiums.

+ Driver education. If you have teenagers at home, especially males, premiums will be high. Period. If you're a teenager yourself, insurance costs can be prohibitive. At least a small discount often is available for young people who have completed an accredited driver training course. Students with good academic records also might be eligible for a discount.

+ Safety devices. In the past, some companies offered a discount for cars with anti-lock braking and air bags; but these safety devices don't always make a difference in premium cost anymore.

+ Get married. In the younger age groups, married men, in particular, generally pay less than single folks.

Ask about any other discounts that might be available. You're providing plenty of information when you fill out an insurance-policy application form, so you might as well try and take advantage of any detail that might knock a few dollars off the premium cost.

Shop around - but don't turn it into a lifetime project

By all means, you should ask for quotes from several insurance companies - perhaps one regular firm, one mail-order firm, and one that sells over the Internet. Make sure you're getting quotes for the same type and amount of coverage, and that you provide complete and accurate information to each company. Be certain, too, that the rates quoted are for the same period. As a rule, insurers that require payment each month charge more than those that send a premium notice, say, twice a year.

Don't hesitate to ask pertinent questions. Many people are reluctant to ask about such things as promptness in claim payments, or what happens if you get a traffic ticket or have an accident - whether or not it's your own fault. Far better to find out ahead of time what the insurance company's procedure would be, and how much your premium might increase after a mishap. Companies that claim to insure only "responsible" and "safe" drivers might interpret those words overzealously, denying coverage - or dropping - anyone who receives even a minor traffic ticket, or is involved in an accident that's caused by the other party.

Insist that rates for each element of the policy be spelled out. You should know how much the liability portion will cost, how much you're paying for collision coverage, etc. Then, if you want to search for ways to reduce the total, you can focus on the area that's most open to adjustment.

Although it's tempting to pick the insurer with the cheapest rates, price is just one factor to consider. You want a company that stands ready to provide quick and efficient claims service, should the need arise. If in doubt, contact your state's insurance department to ask whether a certain company has been the target of major complaints.

Remember, too, that if your driving record is flawed - a history of traffic tickets and/or accidents - you're going to pay for those misdeeds every time the insurance premium is due. After a period of time, many insurers will restore you to a standard category rather than the high-risk group. But you might have to ask for that privilege, or shop around even more.