Home Insurance Advice: Five Things You Need to Know but Probably Don't

Insurance companies are constantly introducing new and improved products designed to gain more customers. One of the more recent introductions to the market is pet insurance, a product designed to help defray the cost of medical care for your family pet. However, is it worth the price? That depends on your motivation for buying it.

Pet Insurance

You can spend a little or a lot, depending on the type of coverage you want and how much you are willing to spend. For owners of more expensive animals the "platinum" policy is not even a question. However, for the majority of UK pet owners the most basic insurance, or no insurance at all, is a better option.

Four Types of Policies

In the world of pet insurance, there are four basic types of policies under which all of the rest fall. By knowing these four types of policies you will be able to better understand what insurance companies are offering you when you are looking for pet insurance quotes. The four types are:

  • Accident Insurance - This is the most basic of policies and covers only vet costs associated with accidents. For example, if the family dog is hit by a car and requires medical attention this type of insurance pays the medical bills up to a certain amount. You will be required to pay the balance, if there is any.
  • 12-Month Policy - Also known as a "time limit" policy, this type of pet insurance is similar to term life insurance for a human being. The term typically lasts for 12 consecutive months under which a specific condition will be covered. After 12 months, even though the policy can be renewed, that same condition will no longer be covered.
  • Maximum Benefits - The maximum benefits policy offers a fairly substantial payout for both injuries and illnesses. The downside is that once a limit has been reached on a particular condition it is no longer covered under the policy regardless of how long you hold it.
  • Lifetime Benefits - This is the most comprehensive of all pet insurance policies. It pays up to a certain amount annually but will continue to cover any injury or illness for the lifetime of the pet provided the owner makes all premium payments. For animals that develop chronic health problems, this policy can save an awful lot of money.

According to a 2011 report from The Guardian, the average Brit is shelling out £28 per month for dog cover and £13 per month for cat cover. Some of the most expensive policies for dogs can run as much as £80 per month or more. That might be a lot if your pet is not considered a member of the family.

Advantages of Purchasing Pet Insurance

In talking about whether or not you should purchase pet insurance we are really talking about larger, long-life pets that could potentially cost hundreds of pounds for annual medical care. We are not talking about fish, rodents, and inexpensive reptiles that can be replaced at a lower price than providing medical care.

That said, the main advantages of having pet insurance become evident the first time your animal is involved in a serious accident or comes down with a chronic illness. As an example, The Guardian article cited a case of canine diabetes that could potentially cost a dog owner up to £100 per month for insulin shots and other medical care. A lifetime policy at a cost of £80 per month seems like a pretty good deal here.

Another advantage of purchasing pet insurance comes by way of a lost or stolen animal. Some of your better policies provide cover that pays for the cost of advertising and offering a reward for the safe return of your animal. Again, it comes down to whether or not you believe the family pet is worth it.

Disadvantages of Purchasing Pet Insurance

The most obvious disadvantage here is spending money every month on an insurance policy you may never use. In a tight economy, even £30 per month could be money spent on things that are more important. You certainly should not spend money on pet insurance if you cannot pay bills that are more important.

The other thing to consider here is whether purchasing pet insurance will encourage you to keep your pet alive longer than you should. Using the canine diabetes example again, you might be able to extend the life of your pet for a year or two with proper medical care. However, will your dog suffer during that time? Perhaps if your expense were greater you would reconsider your decision to continue treating your dog.

At the end of the day, these types of things are never easy to decide. It really comes down to your view on animals and how important your pets are to your family.

Comparison Shopping for Pet Insurance

If you decide pet insurance is something you need to consider, do not buy a policy until you spend enough time shopping around. It should be obvious that pet insurance is very similar to any other type of insurance in terms of price and quality of cover. The lower the price, the less cover you will be offered.

According to Peter Wedderburn of The Telegraph, pet insurance policies vary greatly from one provider to the next. That means the cheapest policy is not necessarily going to be the best one. Just like with car and home insurance you need to be sure what type of cover you are being provided, what your deductibles will be, and what your annual limits will be.

When you are shopping for pet insurance, the following tips should be helpful:
  • compare like policies (i.e. compare one lifetime policy with another; don't compare a lifetime policy with a 12-month policy)
  • compare policies line by line rather than just looking at the bottom-line price
  • get quotes from multiple providers
  • ask about bundling all of your insurance policies together with the same company

There are a number of financial services comparison websites that make a great place to start your pet insurance search. You will find a list of those sites at the end of this article. If they prove unfruitful for your purposes, you can certainly call individual insurance companies on the phone or check out their websites. As a third option, you could get in touch with a local agent to see what they have to offer.

The Self Insurance Option

There is another option for providing for your pet's medical care; an option that mitigates the risk of paying for a policy you will never use. That option is to self-insure. Self-insurance makes sense in some cases when you consider that:

  • less expensive policies don't cover routine care; that money comes out of your pocket
  • the money you set aside for self insurance can be put into an interest-bearing account
  • the self insurance money can be used for other things if need be

To self-insure your pet simply set aside the money you would pay in monthly premiums in a bank account. If you do not know how much to set aside, do a pet insurance comparison just as if you were buying a policy. Once you settle on the type of policy you would likely buy, you will know how much to save.

If you choose to use your pet insurance savings for routine care, you are taking the risk that there will be nothing in the account should a major illness or injury occur. At the same time, paying for routine care separately allows you to keep building that bank balance in the event you need it.

Should you keep saving throughout the lifetime of your pet but never have occasion to tap into the money, you are left with a nice bonus when the animal passes on. You can use that money for burial or cremation expenses, or to replace the pet with a new one. This is just another example illustrate the fact that personal savings are always good, even when it comes to our pets.

Conclusion

The fact remains that the majority of UK pet owners would rather take their chances than spend money on a monthly pet insurance policy. Yet whether or not you purchase pet insurance has nothing to do with what anyone else does for his or her pets. It's a personal decision based on how valuable your animals are to you.

Our final recommendation is to consider very carefully what you are doing before you buy any pet insurance policy. Make sure you know exactly what you are getting into, how much it is going to cost you, and what you might potentially get out of it. If you take your time and make a wise decision, you will be just fine.

If you want to begin your search for pet insurance by going directly to the sites of providers, the following links will get you started. Each of these companies offers varying types of policies at very competitive prices.

  • Pet Plan -- A pet insurance specialist offering policies for dogs, cats, rabbits, and horses. They offer a 10% discount for all customers who purchase online.
  • Healthy Pets Insurance Company --  Since 1996 Healthy Pets has been one of the leading Internet-based insurance companies for pet cover. Their policies cover exotic pets, horses, rabbits, cats, and dogs.
  • RSPCA -- The RSPCA has been looking out for animal welfare since 1824. When you purchase a pet insurance policy through them, 20% goes directly to advancing the work of the organisation.
  • Animal Friends -- Billing themselves as the "nation's most liked pet insurer," Animal Friends offers competitive pricing on dog, cat, and equine cover.
  • Pet-insurance.com -- An Internet-based insurance company offering policies for both cats and dogs. You can get a 25% online discount for single animal or a 30% discount for ensuring both your cat and dog.

Comparison websites are a good way to get a handle on the different types of pet cover and what it will cost. The following comparison sites should be very helpful:

  • Go Compare – Here you can get pet insurance quotes from 20 different providers. Prices start at just £7.10 per month.
  • Money Supermarket -- Get insurance here for your dog, cat, horse, etc. You can even enter contest to win special prizes when you compare insurance policies here.
  • Confused -- No need to be confused about pet insurance quotes. This site offers quotes on various types of policies and allows you earn up to 2,000 nectar points with your purchase.
  • Compare The Market -- This site limits pet insurance policies to just cats and dogs, but you can get quick quotes just by filling out a simple form.
  • U Switch -- Uswitch lets you compare prices among 10 different providers. Direct links to each one are also included for your convenience.
  • Money UK -- This is one of the most comprehensive sites for pet insurance comparisons. They offer quotes on 11 different types of policies from multiple providers. In fact, you can check the prices for 522 different pet cover options.
  • Money Saving Expert -- Offers tips and tricks for finding cheap pet insurance, do's and don'ts for pet insurance, and more.