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1. How prices are determined

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While the internet makes it simple to compare policies and rates, it’s still easy to get confused by all the unfamiliar terms and jargon insurance companies use. The decision-making process is also clouded by longstanding misconceptions — or myths — about how insurance works. 1. How prices are determined

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Each insurance company has its own formula for calculating premium prices, but they all tend to use the same basic factors. These include obvious ones, such as the make and model of the car, how you use the vehicle (e.g., do you drive during commute hours?) and your driving record.

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Here are seven things you should know about auto insurance. Your age, gender and marital status: Statistics show young drivers (with less experience behind the wheel) and male drivers are more likely to have an accident. Married drivers, on the other hand, are less likely to file an accident claim. Where you live: Someone who lives in an urban area with a high crime rate is most likely considered a bigger risk than a policyholder in a rural area with less traffic and fewer car thefts and break-ins. Your credit score: In many states,A recent survey by InsuranceQuotes found that 68 percent of Americans incorrectly believe the comprehensive part of their policy covers damage to their car from a collision. According to the Insurance Information Institute: Comprehensive: Provides protection against theft and damage caused by an incident other than a collision, such as fire, flood, vandalism, hail, falling rocks or trees, or hitting a deer. Collision: Reimburses you for damage to your car that occurs as a result of a collision with another vehicle or other object (such as a tree or guardrail) when you’re at fault. It also covers damage from potholes or from rolling your car. Both comprehensive and collision coverage are optional insurance that protects your car. Liability insurance is legally required because it covers the costs associated with injuries, death, or damage caused to another vehicle or property that you or another driver causes while driving your car. insurance companies can consider credit scores when calculating premiums. The industry says its data shows that drivers with better credit have fewer accidents. Consumer advocates believe this unfairly penalizes lower-income car owners and they want the practice outlawed. There's a better way to park NOV. 21, 201701:15 2. The difference between collision and comprehensive coverage e several ways to lower your insurance bill. In some cases, that means reducing coverage. For example, you might want to drop comprehensive coverage on an old vehicle. Raising the deductibles, what you’ll pay before insurance kicks in, is another money-saving move — if you can afford to cover the potentially higher out-of-pocket costs. According to the Insurance Information Institute: Increasing your deductible from $200 to $500 could reduce your collision and comprehensive coverage cost by 15 to 30 percent. Going to a $1,000 deductibe When it comes to auto insurance, this is probably the biggest area of confusion. Many people, it seems, don’t understand what they’re buying. insurance companies can consider credit scores when calculating premiums. The industry says its data shows that drivers with better credit have fewer accidents. Consumer advocates believe this unfairly penalizes lower-income car owners and they want the practice outlawed. There's a better way to park NOV. 21, 201701:15 2. The difference between collision and comprehensive coverage When it comes to auto insurance, this is probably the biggest area of confusion. Many people, it seems, don’t understand what they’re buying. Q&A Is pet insurance really worth it? 3. A more expensive vehicle doesn’t always cost more to insure That’s why it’s important to figure out what your insurance will cost for the various models you’re considering when you start shopping for a new vehicle. “An expensive SUV might have better claim rates for accidents or thefts than a lower-priced car, so the premiums end up costing less,” said Penny Gusner, consumer analyst for Insurance.com. Is travel insurance worth it? 4. There are ways to pay less for auto insurance There may bcan save you 40 percent or more