12 Minor Factors That Increase Auto Insurance Rates

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Auto insurance is mandatory in every state, but finding the cheapest rate isn't easy. After you spend hours, sometimes days, comparing quotes from different companies and signing up with the best one, an accident can raise your premiums and send you back to square one. Cheapism.com identified 12 lesser-known factors that can cost you dearly when buying auto insurance.

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Insurance providers know that if you live with someone there's a good chance that person will occasionally borrow your car. Liam Dai, an insurance broker for RiskBlock in New Rochelle, New York, says insurance companies can pull up records of people living at your address and add a surcharge to your rate if your roommate has a bad driving record.

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Insurance broker Liam Dai also recommends starting to shop for a new policy seven to 15 days before your current policy expires. Start too early and the quote may no longer be honored when you're ready to sign on the dotted line; wait until the last minute and companies don't have much incentive to give you a discount.

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Adam Johnson from QuoteWizard.com says that a parking ticket doesn't impact auto insurance rates directly, but it can have a negative effect if you forget to pay it. Unpaid tickets wind up in collections, which makes you a bigger risk for insurance companies and results in higher premiums.

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A Spartanburg, South Carolina, resident moved just four blocks and her auto insurance increased by $20. The new address was in a more dangerous area, and the lower rent offset the rate increase, but the change was still a surprise. Her agent explained that a policyholder's location is so important for the insurance company's algorithm that it inputs the latitude and longitude of the residence.

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Given the importance of location on premium costs, it's inevitable that where you park also affects rates. Maja Burzevska from DMV.com says that parking your car in a garage, or even a driveway, can help lower the cost of auto insurance.

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California, Hawaii, and Massachusetts prohibit auto insurance providers from using credit scores to determine premium rates, but everywhere else this number is fair game. Not surprisingly, a lower score means higher cost to you. Many factors affect a credit score, but the most important are your payment history and the amount of money you owe. If you know you'll be applying for a new insurance policy soon, take steps to raise your score.

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Skipping a premium payment, or paying after the due date, can lead to extra fees. The real cost may play out over the long-term because your premium rate is likely to increase and companies may drop your coverage. Letting a policy lapse for 60 days while your car is registered can result in an average rate increase of 11 percent, according to Insurance.com. Avoid this by setting up automatic payments from your bank account or credit card.

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Insurance providers ask where you work and where you live for several reasons. One, they want to get an estimate of how many miles you will drive on average. Two, driving through some urban neighborhoods is riskier than commuting on a highway or through rural areas. If either example sounds like your commute, expect to pay a little extra.

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Your auto insurance may cover towing or roadside assistance, but using that service can count as a claim and possibly increase premiums or use up your "accident forgiveness" benefit. Although using another roadside service, such as AAA, is an added cost, this may be a better option. Membership in these organizations can sometimes pay for itself in discounts with travel providers, mechanics, and retailers.

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It's no surprise that teenagers get into more accidents than experienced drivers, but adding a newly licensed driver can increase your insurance costs by more than a DUI, according to a post by Michael Block, a traffic ticket attorney in New York City. He quotes Insurance.com data, which shows an increase of 129 percent to 176 percent, depending on the sex of the teen (guys are more likely to get into an accident).

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It's not always easy to come up with six months' or a year's worth of payments up front, but if you can, it's worth it. The paid-in-full discount can save you 5 percent to 11 percent on the premium. Moreover, you won't have to worry about accidental late payments.

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Large organizations can use their size to request better pricing on all sorts of products, including insurance. If you're a member of an alumni association, fraternity, sorority, honor society, educational or recreational organization, federal or military organization, or even the National Geographic Society, you may be eligible for discounted auto insurance. Still, that's no excuse to avoid shopping around to find the best rate.