Are cheap pet insurance policies worth it?

We all know that looking after a pet is by no means ‘cheap’. When you add up everything you require for your dog or cat, it can end up costing a small fortune, and that’s before you even look at the cost of healthcare.

So, when you start looking at ways to fund the cost of healthcare for your pets, it may seem logical to consider choosing cheap pet insurance for dogs or cats.

But before you go down this route, the question to ask yourself is, what exactly makes up a pet insurance policy and what will you be compromising on if you go for the cheapest pet insurance or a budget pet insurance policy?

The limitations of cheap pet insurance cover

When evaluating pet insurance costs, be aware that cover offered with cheap pet insurance policies can be extremely limited. So what are the limitations that you should be aware of?

1. Low benefit limits

Some pet insurance policies are simply attached to a general home and contents policy. These may seem to be very cost effective; however, you need to be aware that you can typically only claim a limited amount (usually around a maximum of $750- $1,000 per claim which may be only applicable after you’ve paid your per-condition excess).

This type of policy may serve you well for less expensive conditions, however, you will find yourself out of pocket for the larger, more expensive treatments, which can range upwards from a couple of thousand to tens of thousands of dollars.

2. Policy exclusions

There are other cheap pet insurance policies out there that reduce the cost of cover by only covering certain accidental injuries and excluding all illness related conditions. When you consider that the most commonly claimed vet bills are illness related, it makes you wonder if this type of cheap pet insurance is really worthwhile.

Top 5 most commonly claimed conditions for dogs and cats in 2021:

Source: Petsure claims data 2021

As you can see from the table above, all of the most commonly claimed conditions in dogs are illness related, while most of the most common cat claims are also illness related. So if you are after a policy that will truly cover your pet, it is definitely worth choosing a comprehensive policy that includes illness cover, like our Peace of Mind or Ultimate Care plans.

3. Large excesses

The excess (or per-condition excess) is the amount that you (the pet owner) pays towards a claim before your pet insurance kicks in. You will find that many cheap pet insurance policies have a high excess attached.

This excess is typically applied on a per-condition basis per policy period, which means that you will have to pay the excess amount (which can range from $100 up to as high as $500) each time your pet is treated by the vet for each new health condition every year.

We have listened to our customers, and know you prefer to get money back for each eligible vet bill. We have therefore removed the excess from our new range of policies. This translates into more rebates for you for even the smallest vet bills.

Affordable pet insurance Australia VS cheap pet insurance Australia

For most of us, the most important consideration is to try to balance how much we can afford with the level of cover we are getting. Although pet insurance premiums have increased over time, rest assured that it is still possible to find affordable pet insurance that fits within your budget while giving your pet the level of cover it needs.

As discussed above, cheap pet insurance policies are usually cheap for a reason – they typically have a low level of cover, low annual limits, large excesses and many exclusions.

Affordable pet insurance policies typically provide cover for both accident and illness conditions, however, what makes them more affordable is the fact that you are able to choose a lower benefit percentage (or benefit rate), to help reduce the cost of the policy (the benefit percentage/rate is the stated percentage of each claim for eligible vet expenses for which your pet insurer will reimburse you).

For example, with Bow Wow Meow’s Peace of Mind plan, you can choose between a benefit percentage/rate of 80%, 70% or 60%. By choosing a lower benefit percentage, you are helping keep the policy more affordable by electing to cover more of the bill yourself, while still enjoying a generous rebate (for example, if you took 60% cover, you would need to cover 40% of the bill).

At the end of the day, it is recommended that you choose good quality pet insurance cover, even if you decide to lower your benefit percentage. This way you can be assured that eligible accidental injuries and illnesses will be covered up to your annual benefit limit.

How to save on your premiums

Take out pet insurance early on

Although it does not guarantee that you will get cheap pet insurance, signing up for a policy when your pet is young will definitely enable you to extract more value from your policy. Young puppies and kittens are naturally curious and like to explore the world, which makes them prone to getting themselves injured. By insuring them from a young age, you can be confident that your fur baby will be covered from the start, before any accidents occur or conditions appear.

If you wait to get pet insurance, any conditions that do occur prior to taking out a policy become a pre-existing condition and will not be covered. This is why the best time to get insurance is when your pet is under a year old. Bow Wow Meow offers 2 months free in the first year for puppies and kittens, which helps make puppy or kitten pet insurance even more affordable. You can get a quick quote here.

Note that the “earlier is better” rule still applies if you adopt an older animal. In many cases when you adopt a pet, there is often little or no history. If you provide a certificate of adoption when you sign up for pet insurance, any history before the date will generally be ignored and vet history will usually only be required from the adoption date onwards.

Benefit rates and excesses

The benefit percentage or rate is one way to help make pet insurance more affordable. As explained above, the lower the benefit rate you select, the lower the premium, as you share more of the risk by covering a larger portion of your pet’s healthcare costs yourself.

An excess is another way that pet owners may use to help reduce the costs of pet insurance. Typically the higher the excess, the lower the premium payable. However, you should exercise caution if choosing a high excess, as in most cases it will not be worth claiming unless the vet bill is very high.

For example, if you have a policy with a benefit rate of 80% and an excess of $500, and you make a claim for $700, you will receive 80% of the $700 charge, which is $560, less the $500 excess… which leaves you with only a $60 rebate back from a $700 bill.

This is why it is often better to choose a zero excess and a lower benefit rate if you would like more affordable pet insurance cover. If you chose a policy like our Peace of Mind plan, which has zero excess, and you elected a benefit amount of 60%, for the same example, your benefit rebate would be $420! ($700 x 60% = $420).

Comparison of rebate calculations for the above example: 

As this example clearly demonstrates, when evaluating pet insurance costs, it is worth considering not just the cost of the pet insurance premiums but the amount you will receive back when you need to claim on your policy – and be aware of the limitations of high excesses.

Pay annually

Most insurance providers charge a fee to process premium payments. It typically cost around a dollar to process each premium payment, which can add up if you elect to pay fortnightly. So if you can afford to pay your annual premium upfront, this can be an added source of savings on your premium costs.

Discounts

There are ways to help make your pet insurance policy more affordable, including sign on discounts. At Bow Wow Meow Pet Insurance, we offer discounts to new customers with younger pets. For example, for pets under 12 months of age we provide a puppy or kitten promo discount, which automatically provides you with 2 months free pet insurance spread over your first 12-month premium period. In addition, we also offer one month free for pets over one and under four years old when they sign up.

Pet insurance provides considerable value when needed

Nowadays, pets are considered part of the family. This is reflected in the way we treat our pets, along what we spend on their lifestyle and healthcare.

We have insured thousands of Aussie dogs and cats since we began offering pet insurance cover in 2008. Ten to twenty years ago, many of the veterinary techniques or treatments commonly used today were not available, and many pets were euthanised if they became ill or were badly injured. Today there are far more sophisticated treatment options available, but these come at a cost. The specialisation of veterinary care is grow considerably over the coming years, with associated costs likely to increase exponentially.

In our experience, it is common for pets to land up at an emergency clinic or speciality hospital at least once in their lifetime. An important question to ask yourself is this; “Will I be willing to spend upwards of $5,000 to treat my furry family member if this happens?”

Most pet owners would answer “yes” to this question, yet most pet owners would also be concerned about how they could afford this type of treatment if they were in this situation. This is when the value of pet insurance truly becomes apparent, and the premium payable for a good quality policy is suddenly put into perspective.

It is typically after a claim is made when pet owners start having second thoughts about choosing a cheap dog insurance policy or a cheap cat insurance policy. As shown above, the difference in rebate levels between different policies can be very significant, and the true value of the pet insurance policy  really becomes apparent once the claim has been settled. Pet owners who have chosen well and haven’t simply chosen a cheap pet insurance policy based only on price will often end up with the biggest rebates in their bank account.

As the cost of delivering better healthcare to our pets is rapidly increasing, pet insurance provides the ability to budget for unforeseen risks and bridges the gap between increasing vet costs and the provision of good healthcare, whilst creating peace of mind for pet owners.

At the end of the day, we recommend you do your homework and choose a pet insurance policy that provides good cover and fits into your budget, rather than simply going for the cheapest pet insurance policy. Be sure to get quality cover here.

A pet insurance policy with Bow Wow Meow will help ensure you can always afford to give your pet the best treatment, whatever your budget.

• Find out more about our pet insurance options for dogs

• Find out more about our pet insurance options for cats

• Get an instant online pet insurance quote