How to cope with the high cost of pet insurance - Gareth Shaw

Generic stock photo of a pet dogGeneric stock photo of a pet dog
Generic stock photo of a pet dog
Gareth Shaw, the Head of Money at Which?, analyses another major personal finance issue.

Dear Gareth

Please help me. I’ve just adopted a healthy four-year-old cat, and I am looking to get her insured. But the costs are so high – I was quoted £60 a month by one company. Should I put some money to the side to pay for vet fees instead of getting insurance? Or should I look at a very basic cover?

Name and address supplied.

Gareth says…

I understand the dichotomy you face – I have a seven-year-old cat, Whiskerson, who I got as a kitten. He was adorable (and still is, although a little grumpy now he shares a house with two toddlers) and very cheap to insure at such a young age.

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Every year since then, our monthly premiums have risen as the older he gets, the more likely he is to need some kind of medical treatment and so the cost rises to reflect that.

Let us not forget, medical treatment for our beloved pets is mightily expensive – broken bones can cost thousands of pounds to repair. I recall Whiskerson getting an infection the week before my wedding and having to find £2,000 to pay for his care. I was incredibly grateful to have cover and an insurer that paid out on the spot.

So let’s talk about the fundamentals. Pet insurance covers the cost of vet fees and certain medical expenses, as well as payouts for death by accident or illness, helping to pay for posters or rewards if your cat goes missing, cattery fees if you’re ill and can’t look after your cat and even euthanasia and cremation costs.

They tend not to cover pre-existing conditions, and thankfully your new furry friend is healthy. Had they had an illness when you got them, that would likely be excluded from your policy, even if it was no longer an issue. It won’t cover you for the costs of vaccinations, grooming and neutering – you’ll have to fund that yourself.

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When searching for cover, there are three policy types you’ll encounter – from premium, top-of-the-range insurance, to very limited cover. What you end up buying will depend on your budget, and how much you’re willing to pay for the peace of mind that pet insurance buys you.

Lifetime cover is the gold standard. It pays out for the lifetime of your cat, and is great if your pet ends up needing lots of treatment over its lifetime. It is arranged in two ways – either allocating an amount per condition, or a fixed total you can spend on treatment each year.

For example, per condition cover might allocate £1,000 a year for eyesight issues, and £2,000 a year for another ailment. Once you renew, these limits are reset. Annual lifetime cover, on the other hand, may provide £12,000 for treatment throughout the year. For both, any treatment that exceeds your cover limits will be paid by you. The great thing about this insurance is that they both cover ongoing illnesses every year unless you cancel your policy.

But this type of cover commands the highest premiums. For cheaper cover, you may want to look at ‘non-lifetime’ cover. This will exclude a condition from being covered once you’ve hit your claims limit. One type of non-lifetime cover will restrict certain conditions from being covered ever again once you’ve exhausted your cover limit. It won’t reset when you renew, unlike the lifetime cover iteration of this insurance.

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Time-limit per condition cover is even more restrictive, which comes with a 12-month time limit and a condition limit. Even if your monetary limit for a particular condition wasn’t reached, the condition would eventually be excluded after 12 months.

The most basic form of cover is ‘accident only’. This will pay out when your cat gets injured, but won’t cover illnesses and the vast majority of health issues your cat might face. It’s super cheap, but may well be a false economy.

So should you buy cover, or self insure? This really is down to you and your means. Say your cat was to need a hip replacement in a couple of months’ time. Do you have the £7,000 you’d need to pay for it? If you were to put £20 a month into a savings account paying 1% per annum, you’d have only saved around £2,500 after a decade.

That may help soften the blow of expensive treatment, but without the cushion of some capital as well, it may not be enough if your new cat needs some serious medical treatment.

Gareth Shaw is Head of Money at Which?.

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