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Whether you shop online or use an agent, buying an auto insurance policy is complicated.

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.

How prices are determined:

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.

Other factors that go into the mix include:

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, 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.

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