It is tempting to look at car insurance as just another monthly expense, but in fact your automobile insurance is a small part of your overall financial plan. Insurance is a big part of the financial picture, and looking at your car insurance as part of your overall financial planning picture can save you money while ensuring that you have the protection you need to safeguard yourself, your home and your personal assets.

One of the smartest things consumers can do is to perform an annual audit of their insurance needs. From homeowners insurance and car insurance to specialty products like RV and boat insurance, it is important to know where you stand, both in terms of liability protection and in terms of protection of your personal property.

It is also a good idea to include your insurance holdings when you sit down with a CPA or financial planner. Providing a list of your insurance holdings will help this financial professional determine whether or not you have the protection you need. This kind of review is particularly important if you have a great many assets to protect, but it can be a good exercise even for individuals of more modest means.

One of the most common findings of this type of insurance and financial review is that the driver is not adequately protected against liability claims. Many people make the mistake of not raising their liability limits as they get older and accumulate more assets. But in fact it is essential to periodically review your liability coverage to make sure it still meets your needs. For younger drivers who rent their homes and have little in the way of assets, the state mandated minimum coverage levels may be adequate, but those liability protection requirements will change over time.

Taking the time to review your current level of coverage as part of your overall financial review can be quite illuminating. By looking at your insurance coverage as part of a larger overall picture you will be able to see exactly what you have to protect, and you will be able to make the necessary adjustments in your auto insurance policy to provide that protection.  For instance, if your financial assets are valued at $100,000 you need at least that level of liability coverage on your car insurance policy. Carrying a lesser amount of coverage could leave you on the hook for additional damages in the event of an accident that causes serious bodily injury to another driver or passenger.

The timing of this annual insurance and financial review is up to you, but many people find it helpful to schedule the annual review for early in the year. Many drivers find that reviewing their financial situation and insurance needs around tax time is easier, since those financial documents have already been gathered for tax preparation purposes. Doing your annual insurance review around tax time also allows you to get rid of two potentially unpleasant tasks at the same time. No one likes to pay taxes, and very few of us look forward to poring over insurance records and financial documents. Even so, both taxes and insurance are important parts of life, and taking the time to review your coverage can pay big dividends.

In the end, when you schedule your insurance review is not important. The important thing is that you take the time to ensure that the coverage you currently have is sufficient for your needs. Life changes, and it is important hat your car insurance protection change with it.