Don't you mean the cheapest deal? Not all home insurance policies are the same and the cheapest deal may not be the best deal for you. You want the cover that you need at the best price – not the best price for inadequate cover. The insurance industry claims underinsurance is a big problem in Australia and while it's fair to assume they would say that, most of us are guilty of simply paying our renewal notices without checking that they still do the job or offer the best deal.

In its recent ratings survey of home and contents insurance, Canstar Cannex found it is possible to get twice the level of cover for the same premium or less by shopping around. So if that's not an incentive to review your insurance regularly, nothing is.

What should I look for? What risks do you face? According to the Insurance Council of Australia, burglary and theft make up the biggest proportion of claims but weather-related claims are rising and likely to continue their upward march.

Flood is an ongoing source of problems, so you should read your policy carefully to find out exactly what is and isn't covered.

Canstar Cannex says most policies will cover rainwater run-off but cover can vary if the damage is caused by flash flooding from rivers, creeks, drains or heavy rains.

Floods without rain in your area and landslip due to storms are likely to be excluded and tidal flooding may also be hard to cover. If you live in or near a flood zone, flood cover will be hard to get and even if you can find an insurer to cover you, you may have to pay a surcharge or excess.

Another issue is the type of contents cover you have. Canstar Cannex says "new for old" replacement cover is essential as you won't want to replace lost items with second-hand goods. If your insurance only covers you for residual value, the company says, your insurer may tell you your television was only worth $100 because it was a few years old.

Some policies allow for you to be paid cash for lost items but it is more common for the insurer to be allowed to replace the items. Canstar Cannex says there are also definition oddities in insurance policies to be aware of. For example, while tiled floors are regarded as part of your home, carpets are contents and covered under contents insurance. A wall-mounted air-conditioner is covered under your home insurance but one attached to the window is part of its contents. These are not big issues if you buy bundled home and contents cover, as most of us do, but worth keeping in mind if you're buying separate policies.

How can I save money? The most important thing is to understand how not to save money. Many people think they can save a few dollars by reducing the amount for which home and contents are insured.

But as Canstar Cannex points out, it makes as much sense as insuring your Porsche for the value of a Hyundai.

If your home is destroyed, you may not have enough money to rebuild and replace your possessions. And if it is only partly destroyed (or some of your items are lost) your selected insurer could reduce your payout proportionately by the amount you are underinsured.

So if your home was worth $250,000 but you insured it for $150,000 and then you suffered $80,000 damage, your insurer might reduce your payout to $48,000.

Canstar Cannex says shopping around is the first way to save costs because each insurer prices your policy on its own history of claims. So one insurer may consider you a lower risk than another.

It says you should ask for a loyalty discount if you have more than one policy with the insurer (or for bringing your other insurance across) and if you have installed measures such as security alarms, deadlocks or smoke alarms, find out whether your premium is able to be reduced.

If you can afford it and think the risks are worth it, opting for a higher excess (the loss you wear before you make a claim) can also cut your premium costs.