Insurance is something that most people buy, hoping they never have to use it. So the best way of saving money is to buy the cheapest policy, right? Well, not necessarily. It's true that you can pay a lot more for insurance than you need to, but there's no point in saving a few pounds on a policy that won't pay out when you need it.

Shop around

Whether it's contents, car or travel insurance, the obvious starting point is to look online. There are dozens of different price comparison sites that all promise to save you money. But before you click on the 'buy' button, make sure you know exactly what you're getting for your money.

Excess levels

Some price comparison sites automatically increase the excess levels (which is the first part of any insurance claim that you have to pay). For example, on car insurance policies, the standard excess might typically be £50 or £100, but some price comparison sites raise this to £200 or more. If you're happy to pay a higher excess, that's fine, but you should check the excess level each time when you're shopping around.

Your personal circumstances

Most price comparison sites have a disclaimer when you ask for an insurance quote. This normally involves ticking a box to say you agree with these statements. Don't be tempted to tick it without reading the statements carefully. It may sound like a pain, but if you're not completely upfront about your circumstances when you take out insurance you could invalidate it.

For example, by ticking the box you may be stating that you've not made a claim within the last few years, that you don't have a criminal conviction (this may exclude motoring offences if you're buying insurance other than car insurance), or that your property isn't in a flood risk area. These clauses vary from insurer to insurer.

Popular deals and sponsored products

Be careful when you're shopping on comparison sites that you don't inadvertently click on the 'popular deal' or 'sponsored products' results, rather than the best buys. There's no guarantee that the popular deals will be the cheapest.

Cherry picking

Some price comparison sites may reject you for insurance if you're seen as high risk. You may be turned down for insurance by a price comparison site, but be accepted if you go to the insurer direct (or if you ask for a quote from a different insurance company). It's always worth talking to an insurance broker if only to find out if they can get you a better deal than one offered by a price comparison site. It's particularly useful if your circumstances are unusual or you think you could be high risk. Talk to a broker who is a member of British Insurance Brokers' Association (BIBA).

Compare deals on different sites

Don't assume that all price comparison sites will come up with the same 'best buy' deals. Price comparison sites often have exclusive deals with insurance companies, so the same insurance companies may quote different premium levels depending on which price comparison site you're using. Some even reject customers on one site but accept them via others.

It's also worth checking with the insurer direct - some insurers don't use price comparison sites, so you may miss out on their deals.

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Updated: 17/10/2011

By Sarah Pennells