Driving naked is not an option

Dropping your car insurance to cut costs in a financial emergency can become the most expensive money you'll ever save.

You need a car to find work and get to it. And when money is tight, driving without insurance is just too risky, financial planner Doug Dunham told me in a financial planning story I recently wrote.

Driving naked - without any insurance - isn't a choice. The best thing that can happen is you get pulled over, can't produce proof of insurance and end buying the stuff anyway along with however many hundreds in penalties and court costs to get your license back after a suspension. The worst thing that can happen is you have an accident and get stuck with liability and property damage on top of that.

Theoretically, you can put up a bond to cover potential damages ahead of time, but if you've got that kind of cash, buying the insurance is cheaper.

So, what do you do? First, look for the least amount of insurance you can get by with - Edmunds.com offers a rundown of each state's requirements, but you may need higher coverage, especially if your finance company insists. You are driving their loan collateral after all.

Next, look for the cheapest source you can afford. Lately, online direct sellers such as Safe Auto in Ohio and 21st Century in California are pitching their low quotes for minimum state required coverage. Online sales have been growing faster than traditional agency or brokerage sales for a couple years now, industry watchers say.

But think that choice through before you make it too. Industry statistics show that on a dollar-for-premium-written-dollar basis, complaints about the generally smaller online providers can run three or more times higher than are filed against the good hands-good neighbors guys. Check out any company you are looking at.

Finally, talk with your current insurance agent about any breaks you can negotiate. Your carrier will want to keep you if you've been a good client and, regrettable as it may be, you are commuting less than before.