We understand – your pet is a very important member of your family. Those fluffy beasts you dote upon are much more than just a rat catcher or burglar alert. And like other family members, you just want the best for them.

Health insurance for pets is still a relatively new product. In Australia, there are only two providers of pet insurance – Petplan and PetSure, underwritten by Allianz Australia and Hollard respectively. Between them they administer over 60 policies for 19 brands.

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Pet insurance reviews

Protecting your pets

The policies in our latest review are either basic accident-only cover or more comprehensive accident-and-illness cover (and one that is illness-only). While these cover surgery, hospitalisation and medicines, in many cases dental care, vaccinations and preventative treatment isn't included. For those you might need to add routine care, sometimes called wellness care.

Like human health insurance, the customer can be charged either an excess or a co-payment, or both. The excess is the cost of making a claim, which you might pay once for each condition, each year. In the case of a co-payment the insurer splits the vet bill with you. Depending on the co-pay level, customers can pay up to 35% of the overall bill.

Comparing policies

Despite the apparent variety, differences between policies are often only in the minor details. For example, Petplan's eponymous policies use the same product disclosure statement (PDS) as Guide Dogs Pet Insurance. The two brands' offerings are all but identical: premiums, exclusions, benefit levels, even the names of the policies.

Petsure is trying to diversify its offerings. Since our last survey in April 2014 they have introduced puppy policies, offering locked-in premiums for three years if you get cover in the first six months of your puppy's life. They are also experimenting with an "indoor cat" policy, a cheaper illness-only plan which leaves out accident coverage for animals that are unlikely to need it.

Petsure's Leigh Mellor says the newness of pet insurance can stymie innovation. "It's not well understood as a product, frankly. We've grown quite considerably, and as it grows you're going to see more product innovation."

These innovations are certainly welcome, even though at the moment such "situation-specific" policies don't compete for value with general cover products, or even those offered by the same brand. Puppy insurance certainly doesn't seem worth it at the moment. While customers are spared premium hikes for three years, they can expect to pay a higher rate than new customers with a three-year-old dog. The trade-off for the locked-in premiums is lower annual benefits for the first four years, which adds up to $26,000 less coverage than the adult plan over the same period.

Clause for concern

Since our last review two years ago, we've claimed a win against underhanded practices. Some insurers were forcing pet owners who made a claim to keep paying premiums for a full policy year, even if their pet had died. In all but apparently one case, this practice has been explicitly ruled out.

Insurers are slowly but surely making it clear to customers what their policies contain – and what they don't. PDSs and websites have improved as a result of our prodding, but some information can still be very confusing for consumers.

The lifting of pre-existing condition exclusions is now available, after a waiting period. Previously most policies would refuse to consider covering any pre-existing condition, making it all but impossible for pet owners to shop around for a better policy.

Age discrimination still exists, with older animals costing more in premiums, and sometimes even being forced into a lower co-payment option as they age. Pets over nine years are limited to "seniors" policies or accident-only plans. And most policies still contain a peculiar condition, by which they won't cover your pet for an illness with a known vaccination, even if your pet has been vaccinated.

How much coverage 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?

Benefit levels range from $3000 to $22,000. Within this, some policies set sub-limits for treatment of tick paralysis, dental illness, and skin conditions. 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.

What about routine care?

Routine care is usually offered for a flat rate on top of your premiums, regardless of your pet's species, age or breed, and you don't have to pay an excess to make a claim. From a minimum $60 cost, benefit levels range from $80 to $400.

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 dental illness or alternative treatments. The dental option can be worthwhile, since it gives a much greater benefit level than is offered under routine care.

Getting your money's worth

Because different policies offer different levels of cover, it can be difficult to figure out which one gives you value for money. To make it easier for you, in our pet insurance reviews we levelled the playing field by calculating roughly how much cover you get for each dollar of premiums. But remember: although a policy may be great value, it needs to have the features and cover that best suit your needs.