Why is my neighbor's insurance policy less than mine?

There are certain things that neighbors should never discuss if they want to remain neighborly: Their salaries, their political views and the state of each other's lawns. Add to that list one more topic, the cost of each other's auto, life or homeowners insurance policies.

You might be surprised to learn that your neighbor is paying less for his insurance policies, even though you both live in the same neighborhood and have insurance with the same company. This information might anger you. You might think it's not fair.

But before you call your insurance company to complain, take a deep breath. The odds are that there are several good reasons why you pay a higher premium each month than does your neighbor.

Consider auto insurance. Maybe you have three speeding tickets on your record. Or maybe you were involved in two accidents in the last three years. Your neighbor, on the other hand, might have a clean driving record. Maybe your neighbor commutes to work each day on the train while you drive your car 200 miles to and from work each day. Your neighbor might have an alarm system to protect his car from theft while you do not.

Each of these factors can lower your neighbor's auto insurance rate while boosting yours. Insurance companies provide discounts for a wide variety of factors. If your neighbor's rates are lower, it might be because she qualifies for more discounts.

The same holds true for homeowners insurance. Your neighbor might have an expensive alarm system protecting her property. This can lower her insurance rates. Your neighbor might have a smaller home that is worth less than yours. Again, this could cause his insurance rates to drop while yours rise.

Insurance companies tailor their policies to the individuals taking them out. If you're a smoker, for instance, your life insurance policy will cost more.

Don't look for a conspiracy, then, if your neighbor's insurance policy happens to cost more than yours. Most likely, there are several logical reasons for the price discrepancy.