Insurance can cost thousands and offer very little protection

The website's Mark Greening says home contents policies may have low limits on shed cover, as well as expecting high security. "There is a considerable difference between policies in terms of cover, excesses and exclusions for sheds and other outbuildings, so to make sure that you have the protection you need, it is important that you compare product features, not just prices."

Festival-going, meanwhile, is another insurance hazard, according to the Post Office, which says more than 16 million people will attend an outdoor festival or concert this summer and pack their rucksacks with an average £524 worth of gadgets.

More than half plan to take a smartphone, 23% will be packing a tablet or laptop – and 26% have previously lost items or had them stolen at such events.

The Post Office's home insurance policy includes personal possessions cover of up to £1500, but insurance head Paul Havenhand says: "Those having fun at festivals this summer should be vigilant about the security of their possessions and make sure any valuable items are protected against loss, damage or theft."

Investing in every possible type of cover would cost thousands a year and, as the payment protection (PPI) mis-selling scandal has shown, some policies are not worth the paper they are written on.

Kevin Pratt, insurance expert at MoneySupermarket.com, said: "The UK insurance market is the largest in Europe and there's an endless choice of products. For everyday purposes, anything you own, you can insure."

The only compulsory legal insurance is third-party cover for motorists. But this can be a false economy, as comprehensive cover can cost less, and even if it doesn't, it is well worth having. For older cars, breakdown insurance may be wise too.

Mortgage lenders insist on buildings insurance, but it doesn't have to be theirs – cover is often cheaper elsewhere. Combined buildings and contents insurance can be a better deal than separate policies.

For those without children or a partner, life insurance is optional. But for anyone with dependents, cover at least to the value of any mortgage is essential to clear the debt and ensure loved ones aren't left homeless.

Mr Pratt says: "A lot of employment contracts have life cover built in, so check before buying and factor that into your calculations."

To cut costs further, consider a term policy or decreasing cover, rather than a level, whole-of-life protection.

Critical illness insurance pays a lump sum on diagnosis of a serious condition and can be added to life policies or bought separately. However, it includes only a limited range of specified conditions.

For most people, income protection, which provides a monthly payment to supplement savings and state benefits in the event of illness or unemployment, is a better move.

Mark Jones, head of protection at insurer LV=, says: "We insure our pets, home and even our mobile phones, but not the thing that pays for everything else: our income."

LV= has just launched Sick Pay Insurance, available for under-45s in most occupations with a standard premium based on hours worked, and offering cover of £500 to £1000 a month.

Anyone considering this type of insurance should first check whether their employer provides cover beyond statutory sick pay.

For more information on choosing protection products, visit the independent Moneyadviceservice.org.uk or a broker such as Lifesearch.co.uk.

Private medical and dental insurance are only for those with significant excess income.

However, taking cover for pets' treatment can be sensible.

Mr Pratt says: "You can be charged hundreds or even thousands of pounds in vet's bills very quickly. Like any insurance, pet cover is a luxury until you need it."

Mobile phone and other gadget policies may not be so worthwhile. Phone cover tends to be expensive, difficult to claim on, and often duplicates protection already provided by contents policies. Identity theft insurance is another waste of money.

Providers tell horror stories about accounts being cleaned out and credit ratings wrecked. But in the unlikely event of this happening, as long as the victim wasn't ridiculously negligent, the institutions involved are obliged to sort it out and reimburse any losses.

Extended warranties for electrical goods are rarely worth having either. Most appliances that break down before the end of their expected lifespan do so while still under manufacturer's guarantee.

Special policies for boilers are costly and riddled with exclusions. Anyone who wants this type of cover could consider depositing the premiums in a savings account and dipping into it if repairs are required.

Cover for weddings and other special events can also be expensive and hard to claim on, but it may provide valuable peace of mind.

Whatever insurance you choose, the basic advice is the same: shop around – internet comparison sites are the easiest way – and always check the small print.

A policy that doesn't pay out when you need it isn't worth having, no matter how little it cost.

case study

Jack Smith, 61, a tree surgeon and landscape gardener from Kilbarchan, Renfrewshire, was using a shed for temporary storage of furniture recently when it burned down.

He was relieved to find the shed, owned by his sister, was fully covered by a home buildings and contents insurance, and was happy with the outcome.

Mr Smith said: "The paperwork was all very straightforward and they paid out within ten days." He and his wife Mamie, a 58-year-old catering assistant, have had combined buildings and contents insurance with NFU Mutual for many years.

Mr Smith said: "The premiums are very fair for the cover you get, and there are no nasty surprises in the small print.

"When you phone them up they answer in an instant – you don't have to push lots of buttons – and you always deal with someone who knows who you are. That's terribly important to me."