The Association of British Insurers recently reported an increase in the volume of fraudulent insurance claims that its members were receiving. It is generally assumed that in the wake of the credit crunch people are making claims on policies where they have misreported their personal circumstances in order to deliberately reduce their premiums. Unfortunately, when it comes to making a claim the insurance policy is deemed to be invalid as it was calculated on innaccurate information.

At the same time research has suggested that people consistently underestimate the value of their possessions. One recent survey even went so far as to suggest that the average British home is under-insured by as much as ?8,000.

This could, of course, be accidental and due to people not keeping abreast with changes in the value of their possessions. Fluctuations in the price of gold and other precious metals has meant jewelry is now more expensive than ever, and inflation (until recently) could also have played a part.

All well and good but it's unlikely that the value of people's possessions could have gone up by ?8,000 whilst they weren't looking. It is likely that, as the ABI suggests, people are deliberately underestimating the value of their possessions to save money on their insurance.

Now, this isn't even one of those ideas that seems sensible on the surface. Whilst they might save money on their monthly bills, if they ever have to make a claim it's more than likely that the insurance company will declare the policy invalid and refuse to pay out. Of course the gamble is that they won't have to make a claim, but when you're talking about potentially hundreds of thousands pounds of damage, it surely is better just to pay for the right policy?

Whilst Britain as a whole under-insures itself another report has suggested that some people are accidentally doubling their insurance. Many expensive items these days are sold with their own insurance involved, but these items are already covered on the general home insurance policy and therefore the extra insurance is a waste of money.

The best insurance policy is the one that is most closely tailored to your specific circumstances. The more accurate you are the better value deal you will get and there is little point paying for a policy that doesn't protect you properly, if at all.

Home insurance is a vital product as it offers you financial protection to a degree that you couldn't get any other way. It's possible to get really good deals, even in the current economic climate, and one company that is worth a look is Co-Operative Insurance.