Buying car insurance is almost as much fun as going to the dentist.

But if you get the wrong coverage, or not enough, you leave yourself open to a root canal on your finances.

“The basic mistake many people make when buying insurance is simply saying, ‘I want full coverage,’” says Mario Morales, Director of Underwriting for Property and Casualty for MetLife Auto & Home. “But many people don’t know what’s included or what they need. This means they rely on the agent to give them the right package without regard for cost, needed coverage or retained risk.”

In short, there is no one-size-fits-all in auto insurance. The smart buyer balances needs and risks with cost.

Some insurance agents will happily sell you a policy to cover Armageddon and those who routinely prepare for the worst will pony up. To avoid over-paying for auto insurance, determine the basic coverage required in your state, and then pencil out additional coverage you need to protect your assets.

Keep your emotions out of the decision as much as possible, but don’t overlook this basic point: insurance also buys peace-of-mind and if you knowingly overbuy because it helps you sleep at night, it may be money well spent.

Your age, driving history, and, in some cases, your educational level will affect your insurance rates. In general, a well-educated middle-aged driver with a clean DMV record will pay less than a teen-ager or college kid and young women will pay less than young men for the same coverage because the risk is lower.

The age and type of your car, how you plan to use it, and where you live also affect your rates. Expect to pay more than your country brethren if you drive the car to work every day and live in a big city. A serviceable sub-compact will be cheaper to insure than an SUV or a zippy sports car.

If you buy, or lease a car remember that it will depreciate about 20% the instant you drive off the lot. If totaled in an accident, you may owe more than the car is worth. A finance or lease company will offer insurance that will be tacked on to the monthly payment. In most cases, gap coverage offered by an insurance company will cost less.

About the Author:

Scott Reeves, father of three, is the personal finance columnist for Minyanville.com. He perfected the art of bouncing checks while studying the romantic poets at the University of California, Berkeley.

Related Features:

• Teach Your Kids About Money in MinyanLand on Funschool.com
• Financial Advice on Kaboose.com
• More on Managing Your Money on Minyanville.com