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How to find the best pet insurance policy

Will pet insurance give you peace of mind?

cat looking at piggy bank
Last updated: 23 May 2019

Pet insurance covers you for the cost of vet treatments if your cat or dog falls ill or is injured in an accident. If you don't have easy access to thousands of dollars to treat a serious condition, pet insurance can help cover those costs.

However, the industry has serious problems that means you should think twice before purchasing a policy. Older animals are locked out of many policies, while insurers rarely cover pre-existing conditions. This means it can be impossible to switch insurers and still get the same level of cover. Imagine being locked in to the same health or home insurance policy for life!

This guide will help you answer the question "Do I need pet insurance?" And it will show you what to look out for when shopping for a policy.

How pet insurance works

Pet insurance allows you to claim back a part (or in some cases all) of your vet bill – usually up to an annual limit. 

Most policies fall into two categories: accident-only cover, and comprehensive accident and illness cover. A few cover illness only and two cover accidents plus a small list high-cost of illnesses. While pet insurance covers surgery, hospitalisation and medicines, in many cases dental care, vaccination and preventative treatment isn't included.

In a typical claim, you will pay an excess (around $100), as well as a copayment (usually 20-35% of the vet bill) and your insurer will cover the rest. Excesses are usually charged per condition, so if you need to make multiple claims for the same condition you'll only pay the excess once a year.

While there are many brands offering pet insurance in Australia, they are all underwritten by just three providers: Petplan, Petsure and RACQ.

How much cover do I need? 

You should approach this from two angles. Firstly, consider the maximum annual benefit a policy offers – the total amount the insurer will pay out each year. The second thing to look at is the range of features on offer. Identify policies with features you are likely to need. Will your pug's hereditary conditions be covered? Do you really need public liability insurance for your chihuahua?

Annual benefit levels range from $3000 to unlimited. Most policies set sub-limits for treatment of tick paralysis, dental illness, and cruciate ligament injury. Treatment costs vary between animal and breed. For example, treatment for tick paralysis – a common and serious ailment among animals in the bush – might cost up to several thousand dollars if emergency hospitalisation is required. Consult with your vet about the particular health risks your pet is likely to face due to its breed or your location.

Dental illness is a common exclusion. Speak to your vet: if your pet's breed is susceptible to tooth problems, you should consider a policy with a high limit for dental illness. Some policies let you "bolt on" extra cover for dental illness, if it isn't covered as standard.

What about preventative care?

Routine preventative treatments, like the cost of vaccinations, desexing and parasite control, aren't usually covered. Many policies offer these extras for an additional fixed cost – different brands call it "routine care", "wellness cover" or "tender loving care". Like human health insurance extras, the trick to getting value is to make more in claims than the cost of the bolt-on.

Think of it as a discount voucher for things that you probably should be doing for your pet anyway. The RSPCA estimates that flea or worm medication alone could cost you up to $150 each year. If you claim the entire annual benefit for routine care, you can save between $20 and $65. It isn't much in the big picture, but it might be the nudge you need to take your pet for regular check-ups.

Some policies let you "bolt on" extra cover for alternative treatments, which can include physiotherapy and hydrotherapy.

Policies can change

Pet insurance in Australia is less than 20 years old – a kitten, by insurance industry standards. We're seeing regular changes in the sector – some big, some small – as insurers get a feel for what works and what doesn't. Sometimes this is good for consumers, but only occasionally.

For example, a few years ago ASIC penalised Petplan after it failed to properly disclose important co-payment information. Petplan advertised 100% rebates on vet bills, but didn't mention this wasn't for life – when the pet turns eight, the owner is expected to pick up 20% of the bill. And at 10 years that becomes 35%.

Petplan policies still come with this condition, but now they're actually telling customers about it. Although they offer some of the highest annual benefits in the market, we think it's pretty poor form to reduce the level of cover at an age when your pet is most likely to need it. The insurer says this allows them to keep a lid on premiums.

Switching to a new policy is all but impossible

Getting locked in by pre-existing conditions

Your pet has a pre-existing condition if it showed symptoms of it before it was covered by the policy. Even if your old policy covered you, and you switched to a different policy underwritten by the same insurer, they would consider anything you had previously made a claim for a pre-existing condition. Getting cover for a pre-existing condition is entirely at the discretion of the insurer, and there's no guarantee that they will cover you. If your pet has a chronic condition, your options are limited to staying with your insurer, or dropping the policy and self-funding treatment.

We've also had complaints about insurers using "related condition" clauses to get out of paying claims: if your dog had arthritis in her legs before you got covered, there's a chance your insurer will deny cover for any arthritis anywhere else on her body.

You can't get an old dog a new policy

If you're shopping around to insure a pet older than nine, you'll find yourself restricted to seniors' products and some low-value accident-only policies. The reason given by insurers is that this keeps premiums under control and encourages pet owners to get insured when their animal is young and healthy (so your premiums can subsidise older pets' healthcare needs). New entrant Trupanion accepts newly insure pets up to 13 years of age. 

This restricts the customer's ability to switch, especially if the insurer changes their policy. Some years ago Petsure introduced benefit caps on vet consults and cruciate ligament treatment, which put some owners with chronically ill pets offside. Conceivably, the policy you sign your kitten up to might look like very different to the one covering your old moggy 15 years later.

CHOICE doesn't recommend any pet insurance policies

For most other types of insurances, it's as easy as cancelling your cover and taking up a new policy. But due to the lack of competition, stringent restrictions on pre-existing conditions, and age restrictions on new pets, for many pet insurance customers the only option might be sticking with a policy that no longer suits them – or dropping cover altogether. This is why our review of 86 pet insurance policies doesn't recommend any pet insurance policy, although we do compare them for features and value for money.

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