Pet Insurance Costs: How much is pet insurance?
As pets are considered more and more to be a part of the family, people expect their furry family members to be treated as such when they aren’t well. This has seen the continuous advancement of veterinary medicine over the last decade, which has historically been reserved only for humans. As a result, vet expenses have risen to keep up with the advancement of vet care and since vet care isn’t subsidised by a Medicare system, pet insurance is becoming more and more of a necessity.
Pet insurance is way to protect both you and your pet from unexpected vet bills. Not only does it make sense financially but it makes sense for your pet. Pet insurance costs can be budgeted for each month, but the peace of mind that comes with never having to weigh up the cost of vet treatment is priceless.
So how much does pet insurance cost?
Pet insurance costs vary depending on a number of factors including where you live, cover type, species, breed, age of the pet and age of pet owner. To get a truly accurate idea, we suggest you get a pet insurance quote as our new policies (from 5 Dec 2018) have been amended with better levels of cover and higher annual limits. Having said this, we don’t believe the cost of pet insurance is purely a function of the premium charged, there are other factors that should be considered.
According to Animal Medicines Australia, more than $12 billion was spent on pet products and pet services in 2016. More than a third of expenditure is on food ($4.2 billion), followed by veterinary services ($2.2 billion) and then other healthcare or general pet products. Total expenditure on dogs leads the way at $7 billion, followed by cats at close to $4 billion.
The average annual expenditure on dogs for vet care was $397 and this combined with $228 spent on pet healthcare products totaled $645 per annum. The amount spent on cats for vet care and for healthcare products amounted to $432 per annum. With the total amount spent for the average household for both dogs and cats amounting to $1,975 and $1,480 respectively, the percentage spent on healthcare related products and services was almost 33% for dogs and nearly 30% for cats.
So how much is the real cost of pet insurance? This is best shown when you include the amount spent anyway on healthcare (the amount that would have been covered by pet insurance). The table below shows the average household cost of healthcare related products and services. Let’s assume that pet insurance would cover 80% of the health-related expenses. Although this is a simplistic way of looking at this (since many policies have excesses, exclusions and sub-limits), it will give you a good indication of the real cost of pet insurance. As you can see, when one includes the cost of healthcare related items that would have been spent anyway, the cost of pet insurance is more affordable. Many individuals don’t take these figures into account when comparing. This is a good way of evaluating pet insurance premiums as it shows the real cost of pet insurance.
Based on average Bow Wow Meow premium for dogs & cats, as at May 19.
This brings me to the next question. What is the cost of not having pet insurance. We know that the average amount spent on healthcare for dogs and cats is $645 and $432 per annum respectively. This amount is averaged over the life of the pet and in reality, would be less in younger years and increase with age. However, the point of pet insurance is not just to cover these expenses, it is to cover large unexpected expenses that could end up costing thousands. It is these type of costs that can cause considerable stress & worry and it is hard to quantify worry in terms of a monetary value. Having said that, when your pet is in a serious condition, pet insurance takes stress and worry out of the equation – this is priceless as it leaves you to focus on getting your pet the best possible vet care. The other alternative is too difficult to think about.
How are pet insurance prices calculated?
Pet Insurance companies take into account many variables that influence cost, such as:
- Species: Bow Wow Meow insures dogs and cats only. Cats are generally less risk prone and less costly to treat, and as such premiums may reflect this.
- Breed: Breed plays a significant role in pricing. As an insurer, we understand which conditions are more likely to affect certain breeds based on the historical data we have collected. This data assists in predicting the chances of claim frequency for certain conditions in each breed.
- The animal’s age: Although younger pets are more prone to accidents, older pets are more prone to illness. As a result, premiums need to be risk adjusted as your dog or cat ages.
- Whether your pet is a crossbreed or purebred: As crossbred pets generally suffer from fewer health problems, they typically cost less to insure than purebred animals.
- Whether your pet has been desexed: Pets that have not been desexed have an increased risk of suffering from certain medical conditions, so desexed pets will be cheaper to cover in most cases.
- Postcode: Demographics of an area can affect the veterinary cost of treatments, and there are considerable discrepancies between the different states and areas within each state. This needs to be taken into account so that premiums are fairly adjusted according to the cost of vet care per area.
Is the cost of pet insurance worth it?
Once you start comparing the average cost of veterinary care and the potential costs you will be faced with when treating a serious health condition, the value of pet insurance is put into perspective. The average cost of premiums for an Accident & Illness policy as at 27/11/2018, amounted to $624.53 (calculation based on all active Bow Wow Meow Accident & Illness policies). This will be used in the example below. This pet insurance cost is known and can be budgeted for.
The question that you need to ask yourself is this, “If you don’t have pet insurance, would you be able to pay for an unexpected vet bill for a couple of thousand dollars?”We have put together a comparative table that looks at your options when paying for vet care using the cost of a cruciate ligament procedure as an example.
Example based on a $3,000 cruciate ligament procedure
|FUNDING OPTIONS:||DESCRIPTION:||COST CALCULATIONS:|
|Self funded||Requires easy instant access to cash reserves, which is typically not an option for many people.||Total cost = $3,000|
|Credit (loan, credit card, Vet Pay)||Many pet owners use this option if they do not have pet insurance. However, it does have a number of implications:
Total cost = $3,935
|Pet Insurance||Pet Insurance, similar to other forms of insurance, is about a large number of pet owners paying a relatively low premium into a pool and essentially spreading the risk. This pool provides each insured member a high level of cover from which at the time of need they are able to “claim” to pay for the unexpected costs depending on what they are insured for.
Benefits of insurance:
|Average cost of policy per year = $625
Annual level of cover = $15,000
Cruciate cost = $3,000
Co-payment of 20% = ($600)
Benefit = $2,400
Total cost to owner = $1,225 (premium + co payment), a benefit of $1,775
How do I lower the cost of pet insurance?
Pet Insurance premiums are affected by a number of factors, which has been outlined above.
To reduce your pet insurance costs, we suggest you consider the following options:
- Lower annual limits: policies with higher annual limits (eg. our $20,000 Ultimate Care option) will have higher premiums.
- Adjust the benefit rate: Our Peace of Mind policy allows you to choose a benefit rate of 60, 70 or 80%. The higher the benefit rate, the higher the premium will be.
- Choose a more basic policy: you can choose to exclude Routine Care cover, or move to an Accident Only plan.
Any advice provided is general only. Refer to the applicable Product Disclosure Statement for details of Bow Wow Meow Pet Insurance cover.
Common Pet Insurance Exclusions
- Pre-existing conditions
This does affect many pet insurance policies as there are dogs and cats that may have a health condition prior to obtaining a policy. If this is the case, that particular condition will be excluded from the pet insurance policy. It is also worth noting, that if an (illness condition) happens within the first 30 days of taking out a policy (illness conditions typically have a 30-day waiting period), then it will also be classified a pre-existing condition. Other conditions, such as cruciate ligaments, have a 6 month waiting period. The Cruciate Ligament waiting period may be waived if a Cruciate Ligament Exam Form is completed and signed by your vet on or after the policy commencement date, and received within 14 days of the examination date.
At Bow Wow Meow Pet Insurance, you are able to apply for a pre-existing condition waiver, provided you have continuous cover for an 18 month period and there are no signs of that condition occurring during the 18 month period.
- Ordinary day-to-day and preventative care
Pet insurance (without the optional Routine Care Cover) does not cover you for vaccinations and standard preventative visits. Behavioural & alternative therapies as well as specific diets or vitamin supplements prescribed by your vet are also excluded. Microchipping or flea/tick/worm control are not included. However, our Ultimate Care package does provide the option of including alternative therapies up to a limit of $1,000 per annum.
- Dental Illness (Excluded on all plans except Ultimate Care Plan)
As mentioned above, our Ultimate Care Package covers Dental Illness up to a limit of $1,000. All our other policies do not provide Dental Cover. Routine cover does provide a small benefit towards dental cleaning.
- Occupational use, deliberate harm and negligence and swallowing a foreign object
If you or anyone living with you intentionally harms your pet, any injuries that occur as a result of this will not be covered. In addition, failure to take reasonable precaution to protect your pet from situations that may result in injury or illness (such as ingestion of hazardous) is also not covered. It is also important to know that the policy only covers 1 incident (per policy period) of swallowing a foreign object that causes a blockage or obstruction requiring surgical or endoscopic removal.
- Infectious diseases and parasites
Many people have been caught out by this one, as infectious diseases and parasites are not covered. This is the case even if all your pet’s vaccinations are up to date. Infectious diseases such as Feline Immunodeficiency Virus (FIV) or canine hepatitis, as well as illnesses caused by worms, fleas or ticks (other than paralysis ticks), are excluded. Pet Insurer’s exclude this as they cannot monitor if vaccines have been administered correctly. It is also good to know, that there is sometimes recourse back to the manufacturer of the vaccine. If contacted, they may agree to refund you for any related expenses incurred.
- Elective treatments
Elective treatments are treatments not considered medically essential though. Essentially, anything that falls under voluntary treatment will not be covered (including desexing, though essentially, some of this is covered under Routine Care). Voluntary euthanasia also falls under this category and will not be covered (essential euthanasia as recommended by a vet will be).
- Pregnancy, transplants, prosthetics and other complex treatments
Pregnancy, genetic testing, cell replacement therapy (except when a blood transfusion is essential for your pet’s survival), and organ transplants are not included. Pacemakers, artificial limbs and other prosthetics are also excluded from pet insurance cover.
- Certain services & Procedures
Transport or boarding expenses, ambulance fees and genetic/chromosome testing is excluded.
Other exclusions and details
All the exclusions described above are a high-level summary of most of the exclusions on a pet information policy. Please read our Pet Insurance Product Disclosure Statement for more detail and to see which exclusions apply for each policy type.
Be aware of hidden costs, sub-limits and any other restrictions
Due to the fact that there is a considerable amount of detail in a product disclosure statement, it is very easy to miss some of the important information which is part of most pet insurance policies in Australia. This can often lead to misunderstanding in policy cover, client frustration and very often dissatisfied policy holders. The points noted in the list below are frequently not understood when purchasing a pet insurance policy.
- Per Condition Excess: Bow Wow Meow’s new pet insurance policies do not have any excesses, however, for those policy holders that do have a per condition excess please note that it works as follows: An excess, as stated on the certificate of insurance, is payable when claiming on EACH condition or illness. Accordingly, if you are claiming for 3 separate conditions, then 3 separate excesses need to be paid. However, if you have claimed for a condition before in the same policy period, the excess would only need to be paid once in a policy period (again, as long as it is for the same condition).
- Co-payments: On each claim there is likely to be a co-payment. For example, if you have 60%, 70% or 80% cover, you will need to pay the co-payment balance of 40%, 30% or 20% respectively, of the total claim.
- Premiums increase each year: As the risk of illness increases with age, pet insurance premiums increase each year to adjust for this risk. This, together with other factors such as vet inflation, will have a significant impact on pricing increases as time goes by.
- Sub-limits: Most people understand that there is a maximum annual benefit limit that can be claimed each year. However, there are smaller sub-limits that need to be considered. These are as follows:
- Vet Consultations: Has a maximum sub-limit of $300 per annum
- Cruciate Ligaments: Has a maximum sub-limit of $3,200 per annum (on the Ultimate Care plan and $2,600 on the Peace of Mind plan)
- Tick Paralysis Cover: Has a maximum sub-limit of $3,000 per annum (on the Ultimate Care plan $2,000 on the Peace of Mind plan and $1,200 on the Accident Plus plan)
- Hip Joint Surgery: Has a maximum sub-limit of $7,600 per annum
- Emergency Boarding: Has a maximum sub-limit of $1,000 per annum (on the Ultimate Care plan and $500 on all other plans).10
- Waiting periods: Those that claim for an illness condition in the first 30 days of their policy (there is a 30 day waiting period), will only not have their claim declined, the illness condition will then become a pre-existing condition and therefore excluded from cover. In addition, those that claim for a cruciate ligament within the first 6 months of their policy period will also have the claim declined (and again, it becomes a pre-existing condition) unless the Cruciate Ligament Exam Form is completed and signed by a vet on or after the policy commencement date and received within 14 days of the examination date.
It is always a good idea to read the policy disclosure statement so that you can get a good idea of exactly what is included or excluded from cover. Once you have a good understanding of what is and isn’t covered, you will be able to get the most out of your policy and claim what is covered. At the same time, you won’t be disappointed or frustrated if a claim is not covered as described in the product disclosure statement.