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6 things you need to know about pet insurance

Is it worth buying pet insurance for your dog or cat? Here's what you should consider.

family taking the dog to the vet
Last updated: 08 October 2019

Almost two-thirds of households have pets, and our furry friends mean a lot to us. In a recent CHOICE Consumer Pulse survey, we found that more than half cat and dog owners are prepared to pay up to $2500 for treatment if their pet has a life-threatening illness.

But even though they're prepared to pay the price if they have to, only 16% of cat and dog owners have pet insurance. Most of them (66%) plan to draw on credit or take out a loan if their pet needed treatment and they didn't have the cash available.

It's hard to imagine losing a pet because you can't afford to pay the vet bills. But is it worth taking out pet insurance for peace of mind?

CHOICE has reviewed 86 pet insurance policies. We don't recommend any pet insurance policy due to their many restrictions and the lack of competition in the market – until recently, there were only three providers of pet insurance in Australia. Newcomer Trupanion means there is now a fourth player in the market (find out how we rate their new policy here). If you do decide to take out a policy, here are some things you need to consider:

1. Pet insurance can be expensive and confusing

Owning a pet comes with many financial responsibilities. Average annual vet expenses alone are estimated to cost close to $400 for dogs and around $270 for cats – and that's before you even factor in medications, surgery and emergency treatment. With all these potential bills on your pet-ownership horizon, pet insurance may seem like a wise choice. But with many providers slugging you with premiums that can cost anywhere from $180 up to $4500 per year, it can get expensive. And it can be confusing – there are lots of tricky exclusions and variations between policies that mean you really need to read the fine print to avoid your claim being rejected.

2. You should buy it when your pet is young (from three months old)

The way most policies are structured means that premiums increase as your pet ages. CHOICE pet insurance expert Uta Mihm says, "Premiums are typically lower when opening a policy for a young pet than for an older pet. If you intend to take out a policy, it's best to do so as soon as possible, as the younger your pet, the less chance they're going to have a pre-existing condition that will never be covered."

In addition, once your pet is eight years old, you'll have a much smaller selection of policies available to choose from, and usually only ones with accident-only cover.

Some insurers also have conditions where they'll pay, for example, 100% of the claim when your pet is young (usually as long as they're aged below eight, but with some policies and dog breeds it can be as young as three), but as your pet ages, this payment can drop to, say, 80%, and you'll have to foot the rest of the bill. This isn't helpful when you consider that your pet is likely to need more vet care as they grow older.

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3. Once you choose a provider, you're pretty much stuck with them

Once you've selected a pet insurance policy, you're typically locked into that provider for as long as you want insurance, because it will be almost impossible to find a better deal elsewhere. This is mainly because your pet will age and may have since developed a pre-existing condition that won't be covered by a new policy.

It's very difficult to shop around for a better deal, the way you can with health insurance or travel insurance

Pet insurance providers currently have no legal obligation to maintain the competitiveness of your policy and can make any changes they like when you renew annually (including premium increases, reduction in coverage percentages, added exclusions, and reduced payment limits and sub-limits). It's very difficult to shop around for a better deal, as we explain in our guide to buying pet insurance, the way you can with health insurance or travel insurance.

4. The breed of your pet can make a huge difference

Many factors can affect how much your pet will cost to insure. The breed of your pet can have serious implications on their health and welfare, and subsequent medical costs, throughout their lifetime, and can make a huge difference price-wise.

Uta says, "Cats seem to be similarly priced regardless of the breeds and are usually cheaper than many dog breeds. There can be a large difference in price between dog breeds: for example, Frenchies are really expensive to insure – on average, they cost about twice as much as cover for a Jack Russell terrier."

However, the cost of the insurance may well be worth it if you consider the vet bills you may be liable for due to the breed of your pet (as long as the specific conditions are not excluded by the policy you select).

Be aware that some policies can have sub-limits for certain items (so, your policy may have a $12,000 overall annual limit, but a sub-limit of $1000 for things such as treatment after a tick bite or $2600 for cruciate ligament surgery). Consult with your vet about the particular health risks your pet is likely to face due to its breed or your location.

dog getting warm near a heater

If you're going to get pet insurance, it's best to get it while your pup is young and before it develops any condition that will later be considered pre-existing.

5. There are lots of exclusions, low limits and caps

The policies in our pet insurance reviews are either basic accident-only cover or more comprehensive accident and illness cover, or they may be illness-only, or only cover some specifically stated events.

Comprehensive policies usually cover surgery, hospitalisation and medicines, but things such as dental care, vaccinations, desexing and preventative treatment are usually not included (see point 6 below). Pre-existing conditions and sometimes hereditary conditions are usually also excluded.

You should always check the amount of co-payments, excesses and caps. For example, most policies have a cap of around $300 on veterinary consultation fees (which you'll spend quite quickly if your pet has a chronic illness).

There are tricky loopholes to look out for

"There are tricky loopholes to look out for," says Uta. "Such as, if your pet gets an illness they're not vaccinated for, you will often not be covered. But with some policies, even if your pet is vaccinated against that illness but gets it anyway, you still may not be covered."

"There is also quite often a cap on cover for the treatment of swallowing objects – some policies have unlimited cover for this, whereas some will only cover you for once or twice a year – not ideal if your pup has a tendency to ingest foreign objects."

6. Add-ons for routine care can be good value

Most policies offer an optional add-on for 'routine care' which will cover things like vaccinations, worm and flea prevention and one-off costs such as desexing (some policies do have it included). It's not very expensive to add on (usually around $100) and if you make use of it, it can offer good value. It's also an incentive to make those regular trips to the vet and give your furry friend the best care possible.

"With all policies, it's important to shop around as the cost varies widely," says Uta. "But ensure you are comparing apples with apples, keeping an eye on co-payments, excesses and exclusions. You need to make a careful decision as it's really hard to switch once you've committed to a provider."