In most states, the law requires you to have auto insurance. Here are a few tips you can use to reduce the cost of the necessary insurance -

* Be sure to compare prices

Get multiple quotes from different insurance companies. You can easily find differences of 15 to 20% for the same coverage, so it pays to shop around. But be aware, the lowest price doesn't always mean the best deal, so check into the companies reputation for paying claims before you purchase a policy.

* Rates vary depending upon the type of car

Insurance costs vary depending on car type. For example, an $80,000 high performance sports car will cost more to insure than an economy sedan.

* Age and current value of car

Obviously, if you just purchased a new car, you'll probably want to have full insurance coverage to protect your investment. However, if your car is many years old and doesn't have much of a cash value, you may be better off by dropping any extra coverage, while retaining only the required liability insurance. In most cases, you can trim hundreds of dollars off your annual insurance premiums.

* Accept a higher deductible

Most car insurance companies use deductibles to keep policy costs down. The deductible is the amount you pay towards any damage before your car insurance policy pays. In other words, if your policy has a $200 deductible and you suffer damages in the amount of $500, you would pay the first $200, while the insurance company would pay the remaining $300.

When shopping for car insurance, be sure to look at the premium prices for coverage with various deductible amounts. You may find that changing your deductible from $200 to $500 may trim your premiums by 20% or more.

* Multiple policy discount

Many insurance companies offer a discount if you purchase more than one policy. For example, if you have a policy on your car as well as a policy on your spouse's car, you may qualify for a discount. Be sure to check with your insurance agent - it could save you money!

* Low usage/mileage discounts

As fuel costs increase, more and more people are either working closer to home or maybe even working from home. Increased costs also tend to reduce unnecessary trips and encourage car-pooling. This can mean that you'll be driving substantially fewer miles every year, so you'll probably qualify for a low usage/mileage discount

* Good driving record

A good driving record can reduces your car insurance costs. By driving carefully, avoiding accidents and traffic tickets, your insurance company may offer you a 'safe driver' discount rate.

* Ride on your parent's policy

If you live at home with your parents, or your a qualifying student, it may be possible that you can purchase car insurance by being added on to your parents policy. They'll likely then qualify for the multiple policy discount and you'll get a lower premium than if you purchased a separate policy on your own.