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.

Bow Wow Meow offers a range of flexible, competitive policy options for dogs and for cats to suit every need and budget.

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 can pet care cost without pet insurance. Well 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 unexpected expenses that could end up costing thousands. This is why pet insurance comes with the peace of mind of knowing that most of the big expenses are covered. It is hard to quantify worry in terms of a monetary value. However, when your pet is in a serious condition and you know it is covered, this is considered priceless, as you can simply afford the best possible treatment. The other alternative is 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

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:

  1. You need to repay the loan;
  2. You are usually charged a high interest rate
  3. There may be loan approval processes; involved and application fees/entry costs.
  1. Repayment of $3,000
  2. $900 interest payment over 2 years (at an interest rate of 15%)
  3. Vet Pay charge a $35 application fee

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:

  1. Low premium paid in installments;
  2. Ability to choose your cover and excess/co-payment (how much you want to share in the claim);
  3. Allows multiple claims up to annual limit;
  4. Limit resets on anniversary providing financial peace of mind.
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:

  1. Lower annual limits: policies with higher annual limits (eg. our $20,000 Ultimate Care option) will have higher premiums.
  2. 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.
  3. 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.

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