Find out what impacts the price of pet insurance and how to reduce what you pay for cover
If you’re the proud owner of a dog or cat, chances are you’ve probably felt the pain of hugely expensive vet bills at some stage in the past. An unexpected illness, broken bones, snake bites and a whole lot of other problems can not only be very stressful for you as an owner, but they can also put significant pressure on your hip pocket.
Pet insurance is designed to help you pay for your pet’s healthcare costs, ensuring that you can afford to give your pooch or feline friend the best care possible. Rather than having to compromise on treatment or forego it altogether, pet insurance allows you to take all the necessary steps to look after your pet’s health. There are pet insurance plans available to suit a variety of needs and budgets, and you can choose from an accident only plan, an accident and illness plan or a comprehensive plan.
This article will provide a breakdown of how much pet insurance costs and what you can do to reduce what you pay for cover.
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What impacts pet insurance costs?
- Accident only. This covers the cost of injuries relating to accidents, and premiums usually start around $20 a month.
- Accident and illness. This covers accidents as well as illnesses. Premiums are usually from $35 to $50 a month.
- Accident, illness and routine care. This policy covers accidents and injuries as well as routine care costs. You can expect to pay about $60 or more per month for this type of cover.
If you’re paying more than this, it doesn’t necessarily mean you’re being overcharged. If you have a highly effective policy with extra cover options, you can naturally expect it to cost more than the average. To see whether you’re getting a fair price, you should consider some of the other factors affecting pet insurance premiums.
What impacts pet insurance costs?
Both the pet and the policy determine the cost of insurance. Some factors to bear in mind include the following:
- Species. Dogs typically cost more than cats.
- Breed. Breeds with an increased likelihood of congenital illnesses, or other risk factors, will generally cost more to insure. Purebreds are generally more expensive to insure, and some providers may not offer cover for certain breeds.
- Age. You cannot typically get cover for a pet younger than eight weeks or older than seven to nine years. The older the animal is, the more it will typically cost to insure. This is also reflected in premiums that tend to increase over time.
- Gender. Male and female pets have different health risks.
- Size. Larger animals cost more to house, feed and care for. As a result, they have commensurately higher insurance costs.
- Veterinary history. Your pet’s medical history makes a significant difference. If your pet has already been vaccinated, for example, then you might get lower prices. Conversely, pre-existing conditions and signs of future medical problems can raise the cost and affect your cover.
You should also consider factors that relate to the type of policy you have.
- What’s the excess? This is the amount you must pay towards a claim before you can get reimbursed. A policy with a higher excess might look cheaper because it has lower premiums, but it might be more expensive when you actually make a claim. You can’t compare price without considering the excess.
- Are you using discounts? Pet insurance is a competitive market and discounts can be remarkably easy to find. If you’re comparing the cost of a discounted policy against the full price of another, you might not be getting the full picture.
- How much do you get reimbursed? One policy might cover 100% of the cost, while another only reimburses you 50% or 80%. This is a major difference, especially with more expensive claims.
- Did you pick extras? The extras available will vary between insurers, and the cost can vary depending on whether they were automatically included or selected as optional extras. For example, one policy might include complimentary routine care benefits, while another only offers them for an extra cost.
- What are the exclusions? These are the conditions where your policy will not pay out. The exclusions make a substantial difference to the insurer’s risk and can have a significant impact on price.
- How are you paying premiums? It is often cheaper overall to pay premiums annually instead of monthly or fortnightly, but this doesn’t necessarily suit everyone’s budget.
In short, the more health risks your pet has, and the more extras you have, the higher your premiums.
To work out the real cost of your pet insurance, you will need to consider the excess, reimbursements and other conditions too. The example below shows how a $1,000 per year policy might actually end up costing less than a $500 one.
Calculating the real cost of pet insurance
Jemima wanted to get insurance for her two cats, and was finding it hard to compare the real cost of two different policies.
- Supercover Pet Insurance offers $1,000 annual premiums, no excess and cover for 100% of costs.
- Cheapercover Pet Insurance offers $500 annual premiums, $100 excess and cover for 70% of costs.
At first glance, Cheapercover looked like the more cost effective of the two, but when Jemima considered them in terms of actually making a claim, the true costs became apparent. To clear it up, she hypothetically considered a $1,000 vet bill.
- With Supercover: The insurer pays $1,000 and Jemima pays nothing.
- With Cheapercover: The insurer pays $700 and Jemima pays the $100 excess and the remaining 30% of the bill ($300). Jemima ends up paying a total of $400.
The Supercover policy cost Jemima twice as much per year, but with just one claim the difference between the two dropped from $500 to $100. With a second claim, the Supercover policy would become the cheaper option.
The trouble was that Jemima didn’t know whether her cats would get sick or injured, and if she would be making claims. In the end, Jemima made an educated guess and decided to get Supercover for the more injury-prone cat and Cheapercover for the other. In both cases, she was probably paying too much and should have considered policies from other insurers as well.
How much do different claims cost?
As you can see, getting value for your money from pet insurance is dependent on the types of claims you think you’ll be making. If you have a comprehensive policy, more expensive claims give you more value for your money. As such, it’s worth considering the typical costs of different procedures, so you can think about pet insurance cover in real dollars.
According to The Hollard Insurance Company, there’s often a considerable difference between the average cost of a claim and the highest. Note that your policy will never pay more than the total annual benefit limit. While it’s unusual for a single claim to push you over the limit, it can still happen.
|Condition||Average claim cost in 2014||Highest claim in 2014|
|Cataracts and eye treatments||$449||$7,940|
|Dermatitis and skin conditions||$615||$10,922|
|Foreign body ingestion||$1,272||$16,299|
|Urinary tract infections||$582||$17,402|
To use an example from this list, the average cost of a pet swallowing something they shouldn’t have was $1,272, while the most expensive incident ended up costing over $16,000. In these types of situations, there’s a good chance that cheaper cover will end up costing you more overall.
- Basic policies will often have an annual benefit limit of around $5,000, while comprehensive policies typically carry limits of around $15,000 or more. In this case, a cheaper policy would have left the owner with more than $10,000 in expenses, while a more expensive policy might leave them with none.
- When claims get this expensive, there’s a significant difference between 80% cover and 100% cover.
- The excess is typically from $100 to $200, which makes a considerable difference to smaller claims such as $250 for an ear infection. However, if your priority is to cover the more expensive vet bills, it may be worth aiming for a higher excess as this can reduce your premiums without making too big an impact on your overall costs.
Cheaper pet insurance might get you lower premiums, but all the money saved can disappear quickly if things go wrong. As a general rule, remember that the cost of insurance is based on the odds of you needing to make a claim. When insurance is more expensive, there’s a good chance it’s more important.
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What to look for when reviewing pet insurance costs
- Types of cover available. As mentioned, you can generally choose between three types of policies. Accident only cover protects you against fees resulting from your pet’s accidental injuries (for example a car accident or a fall), while an accident and illness cover also adds protection for the treatment of a wide range of illnesses. A comprehensive policy features extra benefits to provide a higher level of cover, so you can expect each policy type to attract different costs.
- Rebates. Most pet insurance policies will only cover a maximum of 80% of your eligible vet bills, meaning you will have to pay the rest. As some policies will only cover 75% or even just 50% of your bills, you could still have to pay a whole lot of money to treat your pet.
- Sub-limits. Read the fine print to check whether any sub-limits apply to your policy. For example, while your policy may pay out up to $8,000 for claims each year, it may have a limit of $100 for the treatment of tick paralysis. As treating the effects caused by ticks can be very expensive, you can end up having to pay a large proportion of your vet bills.
- Benefits. The benefit limit is the maximum amount you can claim on your policy in one year. This limit typically ranges from around $6,000 up to $15,000, so keep an eye out for a policy that offers a higher limit.
- Additional benefits. What additional benefits are available on your policy and how much extra do they cost? For example, some policies allow you to add a benefit for emergency boarding fees when you are hospitalised, the cost of advertising to find your lost dog and more.
- Bonuses. A number of policies will offer you bonus benefit payments (usually of around $50 to $100) to cover routine care, including things like vaccinations and vet check-ups.
- Premium loading. If you make a large number of claims against your policy, your insurer may implement steep increases to your premiums and the excess you have to pay. Keep an eye out for this as it can cost you a lot of extra money, plus it can be difficult to switch to a new insurer once you’ve got a history of multiple claims.
- Existing cover under home and contents insurance. Though many people aren’t aware of it, some home and contents insurance policies offer cover for your pet’s healthcare costs. Check the fine print of your existing policy before you start looking for additional cover.
- Excess charged. In addition to the percentage of vet bills that you will have to pay, some insurers also charge an excess on every claim you make. This is usually around $50 and is deducted from the rebate amount, and it can end up costing you a lot of money if you make a large number of claims.
- Whether your policy is guaranteed renewable. Check to see if your chosen policy offers guaranteed future insurability for your pet. This can save you money and prevent you having to shop around for a new policy.
How can I reduce what I pay?
There are several steps you can take to reduce your pet insurance costs, including:
- Consider your cover requirements. Take the time to assess exactly what type and level of cover you really need. While the broad level of cover under a comprehensive policy may sound attractive, you may decide that you may only require a fairly basic policy for your pet. This can save you a great deal of money.
- Look out for discounts and coupon codes. The pet insurance market is highly competitive, so many providers will offer discounts and deals in an effort to entice new customers. Keep an eye out for these. You may also be able to enjoy decent savings by using a valid coupon code with the insurer of your choice, entitling you to a nice discount off your premium.
- Multi-policy discounts from providers. If you have more than one pet, consider taking out insurance cover for them with the same insurance provider. Many companies will offer a discount if you insure more than one pet, for example 10% off your premiums, so keep your eyes peeled for similar deals.
- Compare quotes on a range of policies. It is fast and easy to get an insurance quote online, so take advantage of this option and obtain quotes for a number of policies. However, make sure you’re not immediately seduced by the cheapest quote as you’ll also need to examine the level of cover each policy provides.
- Compare a range of different policies. Don’t sign up for the first relevant pet insurance policy you find. Instead, take the time to weigh up the pros and cons of a number of different policies. You can start by using finder.com.au’s comparison tools, and it’s also essential that you read product disclosure statements closely. This is the best way to discover the benefits and exclusions that apply to each policy.
- Check for any existing cover you may have in place. Some home and contents insurance policies actually provide some cover for your pet’s healthcare costs, check your existing policies before you go out and spend money on extra cover.