Every UK household wastes hundreds of pounds a year on overpriced or unnecessary insurance policies. By shopping around for the best deals and scrapping unnecessary policies, bills could be reduced by up to 50 per cent. Here are ten tips on how to reduce your insurance costs.

1. Ditch expensive PPI

Payment protection insurance (PPI) is commonly sold alongside loans, credit cards and mortgages to cover repayments if the borrower becomes unable to pay because of accident, sickness or unemployment. While it can provide useful cover for a few months in the event of redundancy, it is expensive and riddled with exclusions. For example, it does not cover time off work for stress or backache.

2. Ring the changes on your mobile phone

Insuring your mobile costs £6 or £7 a month, or between £108 and £126 over an 18-month contract. But most home contents policies already provide cover. And mobile phone insurance does not offer the best cover. Exclusions mean that you may not be able to claim if, say, you leave your phone on a train. In addition, policy excesses are about £25.”

3. Don't panic about identity theft

Many people are becoming increasingly concerned about identity theft, and financial services providers have capitalised on this. Premiums for ID theft insurance can cost about £7 a month, which usually covers access to your credit record and losses through fraud. But you can see your credit record for £2 from the three credit reference agencies - Experian, Equifax and Callcredit - and banks cannot hold you liable for fraudulent activity, provided that you have not acted negligently.

4. Don't give in to the hard sell

Utility companies try to persuade you to take out various insurance policies. Water companies, for example, may sell standalone cover for damage to water pipes. However, it may be cheaper to take out home emergency cover, if you do not already have this as part of your home insurance. Adrian Webb, of esure, the insurer, says: “Adding home emergency cover costs £44.99 a year and covers your roof, plumbing and drainage, main heating system, domestic power supply, home security and lost keys. Customers can call our helpline and we will arrange for a reputable contractor to carry out repairs.”

5. Shop around

You can save hundreds of pounds on all your insurance if you use comparison websites. When renewing your policy, check sites such as Moneysupermarket.com, Confused.com or Gocompare.com. Remember to look at the level of cover as well as price because the cheapest deal may not be the most comprehensive. Some insurers, including Direct Line and Norwich Union, do not appear on comparison sites, so you have to contact them directly for a quote.

6. Buy online

If you are intent on buying from a particular insurer, do so from its website. The AA says that its customers can save 12.5 per cent by buying car cover online, rather than over the phone. The policies are identical, but it is almost always cheaper online.

7. Car theft immobilisers

Basic precuations can mean that you pay less on your premiums. Ian Crowder, of AA Insurance, says: “If you have a garage, use it. This could result in a 10 per cent reduction. Also consider adding security to your vehicle to reduce the risk of having it stolen. Tracking devices and immobilisers attract the best discounts, while fancy modifications and alloy wheels, which attract thieves, can add to your premiums.”

8. Make your home safe and secure

Darren Black, of Confused.com, the comparison website, says: “Fit smoke alarms in your home and a fire-extinguisher in the kitchen. Install a burglar alarm and put five-lever mortise deadlocks on external doors and key-operated locks on all accessible windows.

“Keep trees that are close to your house trimmed back to minimise the amount of water sucked up through the roots. The drier the house foundations, the greater the risk of subsidence.

“Every winter, thousands of homes suffer flood damage because water pipes freeze and then burst. Adequately insulating your pipes could spare you the headache of flood damage, and the cost of a plumber, as well as a much higher insurance bill.”

9. Holiday cover that is just the ticket

Surprisingly, large numbers of holidaymakers continue to buy their travel insurance from their travel agent or currency provider, which can be a costly mistake. The best value insurance deals are online at websites such as Travelinsuranceweb.com and Insureandgo.com, but you can use comparison websites to compare prices and cover. If you make more than two trips a year, it may work out cheaper to buy an annual policy, rather than single-trip insurance.

10. Be prepared for outrageous fortune

With unemployment and redundancy figures rising, it is worth checking that you have adequate protection. Real-life cover is designed to protect the policyholder from almost any eventuality that can cause loss of income, including redundancy, illness or injury. However, don't expect a payout if you become pregnant or are sent to prison.

Premiums for a 30-year-old male non-smoker taking £100,000 of real-life cover for 35 years would be £21.92 a month without unemployment cover, or £37.68 with this cover. It will pay out 1 per cent a month of the sum insured - in this example, £1,000 - for up to 12 months.