Protecting Your Pet: What You Need To Know

We all want to do what's right for our furry friends - without breaking the bank. Serena Cowdy investigates how pet insurance could cost you hundreds, but save you a fortune.

We all know that pets can be expensive. RSPCA figures suggest that an average dog costs you just under £10,000 over the course of its life; and the average cat isn't much cheaper, coming in at just under £9,500.

If you're on a tight budget, ‘helpful' acquaintances may already have pointed out that getting rid of Rover or Tiddles would save you a packet.

But for many people, this simply isn't an option. Millions of pet owners see their furry (or scaly) friends as part of the family, and would just as soon kick out their partner or children.

So in this two-part series, I'm going to look at how you can spend less on your pets - without their welfare being affected.

In this article, I'll focus on pet insurance.

Do you need it?

The opposition: Those against pet insurance say it's overpriced, with some policies packed full of exclusions that prevent you from claiming. 

It can cost £30 a month, or even more - so if you never make a claim, it's certainly a lot of money out the cat flap.

Self-insurance: There are other ways of providing for your pet. Some people choose ‘self-insurance'; putting money into a savings account each month to provide for pet emergencies.

On the plus side, you'll be earning some interest this way, and if no problems occur, you've built up a nice little fund.

However, problems could arise if you haven't built up enough cash when an emergency happens. 

A good bet? Champions of pet insurance point out that you can get suitable, affordable cover for £10 a month or less.

And imagine the worst-case scenario: you've got no savings, and your pet suddenly needs emergency treatment costing hundreds or even thousands of pounds.

£120 in payments over the course of a year seems a lot more reasonable when it covers £2000 of treatment.

Finally, it's worth remembering that pet insurance doesn't just cover illness and injury.

Many policies also provide for theft of your pet, and some even cover more obscure eventualities, like the cost of a cancelled holiday if you need to nurse a sick pet at home.

What's it all about?

If you do decide to take out pet insurance, it's important to understand that it operates on a different basis to most other personal insurance.

Unlike home and motor insurance - which can be changed annually - pet insurance is likely to be taken out for the life of the pet.

This is because if pets are treated under one policy and then - at renewal - a new one is taken out, the new insurer generally will not cover any ‘pre-existing' conditions.

Which means the pet owner will then have to fork out for treatment of these him or herself. So, it's vital you choose the right policy from the start.

Two main types

Pet insurance policies typically fall into two main categories:

1.) Those paying claims for the first twelve months of an illness only. Some of these also include a financial limit, above which you have to pay costs yourself.

As many conditions last longer than a year, these policies are aimed at customers who only want cover for emergency treatments.

2.) Those that will pay for the whole time the pet needs treatment for that condition, but with a limit on the expenditure each year.

These are generally considered preferable, as they'll pay out for the pet's whole lifetime if necessary (bearing in mind the yearly limit).

Petplan is one insurer providing this service that has been highly recommended by Fool readers on the Pets & Vets discussion board.

The catch is that type 2 - predictably - is usually much more expensive.

Insurance checklist

When choosing your policy, make sure you check out the following things:

Proper lifetime cover: some insurers play some nasty tricks with so-called ‘lifetime' cover. These include adding higher excesses and increasing premiums as your pet ages.

The best lifetime cover policies should guarantee not to increase the price with age - and really will cover conditions for life.

Excessive excesses: Check out the amount of excess you'll have to pay, and watch out for policies with ‘co-excesses' where you pay a percentage of any claim. 

If you agree to pay, for example, 10% of any claim, you may have to stump up hundreds of pounds if your pet is seriously ill or injured.

Hereditary conditions: Some policies specifically exclude treatment for hereditary conditions, and others also exclude conditions animals were born with.

Certain breeds are more likely to develop these than others, so check out which might affect your pet.

Dental care: Some policies don't cover any sort of dental problems.

Most others will only pay out if your pet has had regular dental check-ups - so make sure you keep these up if you want to claim for dental expenses.

Theft: If your pet is worth a lot of money, it's particularly important to check you're completely covered in the event that he or she is lost or stolen.

Other people: Public liability cover is also a big plus if your pet is likely to harm someone else.

Gnasher may not have a vicious bone in his body, but what if he jumps up and knocks someone over, or runs into the road and causes a crash?

Tell them everything! Make sure you disclose your pet's full medical history.

Final arrangements: Some insurers will pay for your pet to be put down, and a few even cover the cost of cremation. 

Read the small print! As with all financial products, read the small print to make sure there's nothing you (and I) have missed.

Unfortunately, The Fool doesn't provide a comparison service for pet insurance (yet!), but there are plenty of other websites that do...

Keep an eye out for Part Two when I'll look at other ways to keep your pet costs down.

More: Insurances That Rip You Off!

Some UK animal charities offer their own insurance packages.

The PDSA, RSPCA and Blue Cross all donate a percentage of their premiums to helping sick and injured animals in their care.

As always, make sure these policies actually suit your specific circumstances before you sign on the dotted line! You can always donate any savings you make elsewhere.