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.

For example: A lot of people mistakenly believe red cars cost more to insure.

“That’s not the case. What drives up rates are things like speeding and accidents,” said Loretta Worters, vice president of media relations at the Insurance Information Institute. “So, if you have a red car and you speed and get a ticket, or have an accident, those are reasons for a rate increase, not because you drive a red car.”

Insurance companies consider a lot of factors about the vehicle when setting their premiums — including the make and model, age, body type, engine size, the cost to repair and the likelihood of being stolen — but not the color.

Here are seven things you should know about auto insurance.

1. 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.

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.

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.

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.

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.

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.

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.

4. There are ways to pay less for auto insurance

There may be 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 deductible can save you 40 percent or more.

Insurance companies offer discounts for low-mileage, multiple cars, safe drivers (no moving violations in three years) and students with good grades — just to name a few. You may also be able to get a better price for bundling auto and homeowner’s coverage with the same company.

5. Personal auto insurance doesn’t cover using your vehicle for business

Most policies exclude driving a personal vehicle for business purposes. Many companies will cancel your policy if they discover you’re doing this.

“People need to be aware that if they do any kind of side gig — pizza delivery, messenger or ride-share driver — they need to make sure they’re covered, because if you're in an accident, you might be on the hook for everything,” Gusner said.

Talk to your insurance company about getting an “endorsement” to your policy for that business driving. Ride-share drivers — such as Lyft and Uber — have good coverage from the ride-share company when they have a customer in the vehicle. It’s when they’re driving around waiting for the next rider that they’re at risk. The added coverage provided by a business use endorsement is reasonable, typically $10 to $20 a month, according to a survey by NerdWallet.

6. Let someone drive your car, and your insurance will pay if they have an accident

The general rule is: Auto insurance follows the car, not the driver.

“If you loan your car to someone else, you're essentially loaning them your car as well as your insurance, in most cases,” said Eric Madia, vice president of product design at Esurance.

So unless it’s an emergency, or you’ve been drinking, you need to think about the insurance implications of letting someone else get behind the wheel of your vehicle.

7. Let your car insurance lapse and it could drive up the price when you need it again

It’s tempting to cancel your car insurance when you don’t plan to drive for an extended period. It’s also easy to forget to pay a bill. Whatever the reason, if you let your coverage lapse, your insurance rates will be higher should you need coverage again down the road.

As Esurance notes in a blogpost: “Car insurance companies consider the uncovered to be higher risk than those who diligently keep their policies in force. And even a one-day lapse in coverage can lead to higher rates.”

If you won’t be driving the car for a while for some reason, contact the insurance company and see what options you have.

How to get the best price on auto insurance

Buying insurance is like any other purchase: If you want the best price, you need to comparison shop. Every insurance company has a different underwriting policy which results in different prices. You can compare policies side by side at sites such as InsuranceQuotes, Esurance and Insurance.com.

“Insurance rates vary, sometimes by hundreds of dollars a year, with different insurers,” said Worters at the Insurance Information Institute. “You want to make sure you have an auto insurance company that has a good rating, offers good rates, but also provides good service.”

For those who already have auto insurance, Consumer Reports suggests doing a rate check every two or three years. “By looking beyond just a couple of insurers, you’ll have a better shot at savings,” the editors write. You should also shop the market whenever your personal circumstances change, such as getting married, divorced or moving to a different house or apartment.