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Pet health insurance

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The Pros and Cons of Pet Health Insurance

Taking out health insurance for your pet after accidents can be a wise investment, saving you as much as 100% of your vet bills.

We look at the benefits and shortcomings of pet health insurance, and answer the questions we’re most often asked.

Revised, August 2016: Since we last updated this article there have been some changes to the pet insurance policies on offer. We’ve updated the article to reflect these. See ‘How much cover.’

Start here to read the full article, or go straight to frequently asked questions

Here at Alpine Animal Doctors we do our best to keep the cost of veterinary care as low as we possibly can. But there’s no getting around the fact that, sometimes, animal health care can be expensive. Complex surgical procedures following a serious accident or injury can run into thousands of dollars. Ongoing treatment when an animal develops a serious on-going medical condition can also quickly mount to substantial sums.

No pet carer wants a shortage of money to force them to face the agonising choice of euthanising an animal that can be brought back to health. One way to mitigate unexpected vet bills is to take out pet health insurance. There are dozens of different pet insurance products available. They’re much the same as any other insurance — you pay a monthly or annual premium to protect yourself against the cost of specific accidents and/or illnesses affecting your pets.

We’re great fans of pet insurance. Not only can a good policy save you as much as 100% of your vet bills, it can give you genuine peace of mind. Knowing that if an emergency arises your costs for even complex treatment or surgery are mostly covered can help you sleep easy.

However, as much as we encourage our clients to take out insurance, we can’t say that they’re particularly cheap — premiums can range from a couple of dollars a week for very basic cover to over $1,000 or more a year. But for many families it is far easier to pay a regular monthly premium than to find what might be a substantial lump sum when an emergency arises. And the probability that you will face an emergency at some point is quite high. There are more than 6,000 diseases and medical problems that can affect animals and, on average, one out of every three pets will need veterinary care each year. The majority of that treatment will be because of sudden illness but there are also accidents, snake bite and poisoning incidents that can be very costly to treat.

We also think pet health insurance is more complicated than it needs to be. So, despite our general enthusiasm, in this article we try to point out some of the pitfalls you might come across when you first  consider insuring one or more of your furry family.

We think it important to stress that Alpine Animal Doctors does not sell pet insurance policies. Nor do we receive any form of payment or commissions from the various insurance companies. So we can safely say that any advice we may provide regarding pet insurance will be completely neutral.

Perhaps the first thing consumers should be aware of is that, although there are dozens of companies offering pet insurance policies — from the RSPCA to Woolworths — almost every policy is underwritten by just two companies — Hollard and Allianz. Which is why most policies have very similar features. The differences are usually in premiums, exclusions and often only found in the fine print.

We’re familiar with most of the major insurers through our clients. If you plan to arrange pet insurance we urge you to thoroughly research the available policies. Unfortunately, not all pet insurance products are created equal. Some have so many exclusions that they’re effectively useless. Others have unacceptably large excesses or ‘co-payments.’ There can be big differences in premiums and cover between policies. And, based on our experience with our insured clients, some companies are more reluctant to pay out on claims than others. We’ve provided links to the websites of most of the insurers to help you research the various policies available.

Dr Bek is also happy to discuss with individual clients which type of cover might be most suitable for their pet but, in the end, the decision on whether to insure or not, and which policy to buy, must be yours and should be based on your specific circumstances.

Your pet insurance questions answered

Should I insure my pet?
Which cover?
How much cover?
Co-payments and excesses
How much does it cost
Age limits
Exclusions
Additional benefits
Cover for ticks and snake bite
Maximum benefits
Excess payments
Premium loadings
Waiting periods
Chosen vet
What should be covered?
When should I start insurance?

Should I insure my pet?
Not every pet will need insurance. You have to weigh up the risks of them falling ill or having an accident against the ongoing cost of premiums. Dogs are more likely to have an accident than cats, although that’s a fairly sweeping generalisation. Bigger breeds of dogs tend to have more medical problems than small dogs. Inbreeding and genetics mean some breeds are more prone to hereditary conditions, which can mean higher insurance premiums, or a refusal to insure.

Individual animals can also be more or less likely to experience problems. The chances of a small housebound dog having a serious accident are probably less than the ‘dumb mutt’ with no road sense, who eats everything he comes across, chases snakes and sits on venomous spiders and is generally accident prone. Again, that’s a generalisation but we all know one of ‘those’ dogs. They’re prime candidates for comprehensive insurance cover.

Where you live can also be a factor. Paralysis ticks and venomous snakes are more prevalent in some areas than others and snake bite in particular can be expensive to treat.

It’s probably fair to say that pets living in rural areas and getting plenty of ‘free range’ outdoor exercise are more likely to be good candidates for insurance cover than those that live a quiet life in apartments, with moderate, controlled outdoor exercise.

Which type of cover?
Most pet insurers offer a range of products. Each company might call the classes of cover by different names but they can be broadly grouped as:

Accident: Limited to conditions such as broken bones, injuries etc. The most basic cover, and the lowest premiums. While this type of policy has no cover for illness it can be helpful for some people and is quite popular because of the lower annual cost. An accident requiring extensive and complex surgery and rehabilitation can be very expensive and is probably the event that most worries pet owners.

Illness: Covers the cost of treating specific conditions but excludes accidents. Exactly which medical conditions are covered depends on the policy but in general treatment for serious illness such as cancer would be covered, as would conditions such as diabetes, gastrointestinal problems etc. Policies limited to illness are becoming rarer, with more insurers combining accident and illness cover in a ‘comprehensive’ policy.

Comprehensive: Combines cover for both accident and illness. These policies provide the most extensive cover but attract the highest premiums. Most of them also offer specific ‘sub cover’ for things like ticks and snake bite.

Comprehensive Plus: Sometimes called ‘Major Medical’ or ‘Platinum’ policies these products combine full comprehensive cover with additional benefits such as some coverage for routine vet visits, consultations and vaccinations etc.

Our recommendation would always be for at least comprehensive cover.

How much cover?
At the most basic level you may already have some form of pet insurance included in your existing Home and Contents insurance. Usually the cover is only a few hundred dollars (typically $500) but it’s worth checking to see if it’s included.

For the major pet health insurers it’s basically as little or as much as you like, but with a maximum limit. How much cover depends on the policy you select and the level of premium you are willing to pay. Cover varies between a low of around $1,000 a year up to a high of around $20,000. The average is around $8-12,000. This amount is the maximum your chosen insurer will pay out in any one year across all claims. As far as we know there is no policy that does not have this type of capped maximum.

In other words, if you take out a comprehensive accident and illness policy with a sum insured (or ‘annual benefit limit‘) of $8,000 and your precious pooch has a bad year with lots of serious on-going treatment then, while your claims for individual treatments might be quite modest, if when added up they exceed $8,000 for the year, the maximum amount your policy would pay out in any one year cannot be more than $8,000.

Co-payments, ‘gap’ payments, and excesses.
It is also important to understand the difference between the amount insured, or the annual benefit limit we discussed above, and the ‘maximum benefit payable‘, which is the most the policy will pay out on a single claim. Almost all policies will not pay out the full amount of the sum insured for any one claim. In most cases a claim will pay only up to a set percentage of your veterinary bills. This percentage varies widely, from a low of around 50% to a high of 85%. The average is around 75-80%.

Staying with our example of a policy with an $8,000 annual benefit limit, if your pet was involved in a serious accident that required extensive, complex emergency surgery which is going to cost $5,000 then, depending on the maximum benefit payable in your policy, your insurance payout for that procedure could be as little as $2,500 or as much as $4,250. It will not be the full $5,000.

This might seem a bit on the nose but it doesn’t actually mean you are only covered for 80% or 85% of the amount you thought you were. If the poor, long suffering pooch in our examples were to have an accident in May that needed $3,000 worth of surgery and then, in July, were to then contract an illness that needed a further $4,000 in specialist treatment, and in October needed further treatment costing $1,000 then all three claims would be paid out. At an 80% co-payment you would be reimbursed a total of $6,000 for those three claims.

These ‘maximum benefit payable’ and ‘percentage of vet bills covered’ conditions catch out many people. We understand the logic the industry is using here but, as veterinarians, we do believe that policies could be both simplified and better structured to match prevailing conditions, without substantially raising premiums. We believe that if somebody takes out a $10,000 cover then they should be able to reasonably expect that, in the event of a legitimate claim, or series of claims, they would be able to claim up to the full amount of that cover over a year. It’s not as if the premiums are exceptionally low.

Updated Sept 2012: One underwriter, Allianz, has recently begun to offer policies via PetPlan and PetCover that do offer 100% coverage of the costs of treatment for illness and accident, up to an annual maximum cover.

PetPlan’s ‘Covered for Life’ policies allow you to choose an annual maximum (for dogs you can choose either $10,000, $15,000 or $20,000 cover, with an excess of either $100, $250 or $500 per unrelated condition). These ‘Covered for Life’ policies will then pay out 100% of any/all claim(s) during the year, up to the maximum insured. For example, if you had the $10,000 annual cover and over the course of the year your dog needed treatment costing $9,900 you are fully covered for that amount, less the excess. If your dog’s treatment cost $11,000 however, your cover would be capped at $10,000.

The PetPlan and PetCover ‘Covered for Life’ policies are, as far as we know, the only products that offer this kind of cover. We think it is a simpler and more easily understood way to provide pet health insurance and we would hope that other insurers would follow suit. But whether this type of ‘100% cover’ is actually better for you and your pet than the more prevalent ‘gap’ or ‘co-payment’ percentage covers on offer will depend on a number of factors, including the level of cover and premiums, and what exclusions are in the policy.

We strongly recommend that any pet owner considering pet insurance gets at least three quotes and carefully examines the PDS (Product Disclosure Statement) for each policy.

Most policies also have an excess per condition or per claim, in addition to the maximum percentage of veterinary bills covered. These can range from around $100 up to $500 per claim. You select the excess. The lower the excess the higher the premium.

Having said all that it is only fair to also point out that the examples we use here exaggerate the likely costs of any one procedure/claim. In reality, $4,000 for specialist treatment on a dog or cat would be the exception rather than the rule. In general a policy with a reasonable maximum cap of $10-$12,000 is likely to adequately cover all but the most unusual of circumstances.

How much does it cost?
Depends on the amount and extent of cover you choose. The lowest premium we are aware of is $1.50 a week ($80 a year). But that’s for very basic cover with a maximum cap of $500. For more realistic cover you’ll find premiums ranging from $5 a week ($312 a year) to $20 plus (more than $1,000 a year) which provides $15,000 of cover with an 85% percentage of vet bills paid.

The most popular coverage is a comprehensive accident and illness cover with an annual maximum of between $8,000 to $12,000. At the time of writing, for a typical policy like that you can expect to pay a premium of between $7 and $10 a week, depending on the insurer, the coverage and the excess chosen.

In making your choice you have to weigh up the total cost over the life of your pet against the considerable savings you’ll make in the event of one or more major claims. For a medium to large size dog you might be looking at between $4-5,000 in premiums over the life of the dog. Which might seem a lot but when a single emergency can cost $3,000 or so you can easily end up with claims exceeding the total premiums over time. Pet health insurance is just like every other type of insurance cover — it’s there to give you security, it’s not something to make a profit from.

There is also the option of ‘self insuring’. Instead of taking out insurance, some pet owners prefer to put a lump sum in a separate bank account and then add regular amounts to that during the life of their pet(s). This can work very well for some people and, if your pet never suffers a serious accident or illness, the money in the account is still there for other uses.

The problem we often see with this kind of system is when the pet owner is unexpectedly faced with something particularly serious — particularly in the animal’s early years — and the amount put aside proves woefully inadequate to cover the full cost.

Check the fine print for…

Age limits: Most policies allow coverage to begin at about 8 weeks of age. But the upper age limit can vary considerably. Ideally you should be able to take out a policy up until your dog is at least 9 years old, without too many conditions or increased premiums. Avoid policies where the upper age limit is much less than 9 years. And check that, once insured, your pet will have lifelong cover without onerous conditions or dramatically increased premiums regardless of age.

Exclusions: Every policy has exclusions — conditions and/or events that are not covered. In some however they are far more extensive than in others. The most common are pre-existing conditions (we know of no policies which will cover these), hereditary or genetic pre-disposition, bi-lateral conditions (i.e., where a pet has two of some body part — legs are the obvious example — and develops a condition in one, perhaps a cruciate ligament problem, only the first condition/injury is covered, even if the animal subsequently has a similar issue in another leg) and pregnancy etc. Check that the policy you are interested in does not exclude anything you might be concerned about. Basically, the fewer exclusions the better. A good rule of thumb is how, or if, the policy covers things like cruciate ligament treatment.

Additional benefits: Some policies offer additional benefits in the form of small payments for routine vet treatment, vaccinations, or for boarding kennel fees, coverage while overseas, advertising if your pet strays, theft or death benefits etc., etc. While these are nice to have remember that they’re no substitute for good, flexible cover for surgery and treatment, and they will increase your premiums.

Sub covers: It’s important to make sure you are covered in the event of things like paralysis ticks, snake bite, spider bite and toxin ingestion etc. Often these are separately covered within the policy. And, check how much the maximum benefit for these treatments are. Some are as low as $500, which would go nowhere near covering the cost of snake bite treatment, others go up to $4,000.

Maximum benefits: Apart from making sure you get an adequate maximum benefit, check that the maximum benefit does not change (reduce) from year to year as your pet ages.

‘Gap’ or co-payments: Check the maximum percentage of veterinary bllls the policy will cover. Avoid any policy where the percentage is less than 75% unless you are confident you will always have the funds to cover the difference. We suggest 85% is the optimum level for most families.

Excess: Check that the excess per claim is not too high. Zero is obviously best but accepting an excess of around $100 will reduce your premiums quite a lot. On the other hand, an excess of $500 per claim would mean that for all but the more complex treatments your excess would probably be greater than the treatment cost. If you choose to have an excess, make sure that it’s applied per condition and not per claim. That means that if your pet develops a specific condition that needs multiple treatments each year you will only pay one excess each year for that condition.

Premium loading: Don’t choose a policy where a sharp rise in claims in any one year results in increased premiums and/or excess. Read the fine print (the Product Disclosure Statement).

Waiting periods: Check the length of waiting periods for coverage of specific conditions. They should be weeks rather than months.

Chosen vet: Some policies limit you to specific vets. Look for a policy that allows you to take your pets to any vet of your choosing.

What should be covered?
At a minimum, a good comprehensive pet health insurance policy should cover at least the following:

Emergency care after an accident or injury
Hospitalisation & specialist care
Cruciate ligament surgery
Cataract surgery
Fractured legs
Heart surgery
Spinal surgery
Brain surgery
All illnesses
Cancer treatment
Infectious diseases
Ear/eye conditions
Gastrointestinal problems
Skin conditions
Hereditary defects such as dysplasia, entropion and ectropian, cryptorchidism and congenital defects.
Tick paralysis
Poisoning
Snake or spider bites
Laboratory and diagnostic tests
Radiology
Prescription medicines and drugs
Consultations and visits
After-hours emergency house calls.

When should I take out pet insurance?
As early as possible. Insuring a three-month old puppy with no pre-existing health conditions is cheaper than insuring a 5-year old dog. And your lifelong cover is guaranteed whatever conditions the animal may subsequently contract.

Some people suggest that the best time to take out pet insurance is before your new kitten or puppy is examined by a vet for the first time. The rationale is that by doing this there can be no possibility of a pre-existing condition being identified and noted on your pet’s veterinary record. Some insurance companies have been known to refuse to pay out on these grounds, even if the condition does not manifest itself for some years.

Is insurance only for dogs?
No. We have talked mostly about dogs here because dog owners are the biggest users of pet insurance. But you can also insure your cats and, with some insurers, horses too. Insurance for other pet species is rare. If you are planning to insure more than one pet — perhaps a cat and a dog — make sure you check if the policy offers multi-pet discounts.

Which is the best policy?
We can’t really answer that. Your pet health insurance should be chosen based on the specific needs of your pet and your family budget. There are a couple of insurers that, in our experience, have flexible, moderately priced policies and pay claims promptly, but we can only advise if these might be suitable for you after talking to you about your pet’s specific needs.

If you’re considering pet health insurance and are not sure what to do you are welcome to contact Dr Bek for a chat.

E&OE. These articles are intended as a guide only. They should not be used for diagnosis or treatment of any individual animal and no person should place reliance on information derived from them, where such reliance may result in loss, damage or injury. Always consult a qualified veterinarian to obtain advice.

Although Alpine Animal Doctors make every effort to ensure that the information contained in our articles is accurate and up-to-date we can accept no responsibility for errors or omissions that may occur.

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Alpine Animal Doctors
7047 Great Alpine Road
Porepunkah, VIC 3740
PO Box 393, Bright, VIC 3741
Phone: +61 03 5756 2444
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