Pet insurance helps to cover unexpected veterinary costs as a result of injuries or illnesses. Our pets are just like us – they get ill from time to time – especially as they get older. Unfortunately our pets don’t have the benefit of the NHS like we do. Vet bills can cost thousands of pounds, so insurance provides reassurance that these costs will be covered. But frustratingly, the cost of insurance premiums can change each year and from policy to policy. So why does this happen? This article will take a look at factors that can influence pet insurance costs.
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How are insurance premiums calculated?
Insurance companies are businesses, and businesses don’t want to lose money. This means they calculate insurance premiums based on the likelihood of you claiming, and potential costs of any claims.
Factors that insurance companies may take into account when calculating the cost of your insurance premium include:
Breed
Certain breeds are more susceptible to certain conditions. If you own a breed that is susceptible to a particular condition this will increase the likelihood of a claim so your insurance may be more expensive. Breeds that are larger in size are also likely to generate more expensive veterinary bills as they need larger doses of drugs.
Age
Just like us humans, our pets are more at risk of suffering from illnesses as they age. Certain conditions, such as chronic kidney disease in cats, and osteoarthritis in cats and dogs, are really common in older pets. So again, the older your pet is, the more expensive your insurance is likely to be.
Where you live
Veterinary fees will vary across the country and the cost of fees in your area will factor into your insurance premiums.
Type of cover and insurance excess
A more comprehensive insurance cover will cost more than a basic cover. The cost will also be affected by how much excess you agree to pay in the event of a claim, the higher the excess, the lower the cost of the insurance.
Previous claims
If you have previously claimed on your insurance, then the premium is likely to increase, this is because if you claim once, you are statistically more likely to make further claims.
Pre-existing conditions
If your pet has a pre-existing condition then this is also likely to make your insurance more expensive, again, because on average you’re more likely to claim on it.
Why does the cost of my pet insurance rise each year?
The above factors are all well and good, but you may be wondering why your insurance renewal premium increases each year, even in cases where you haven’t made a claim and your pet is still relatively young.
Here are a few reasons why this is happening:
Inflation
Insurance premiums will increase each year with inflation. Inflation means the average increase in prices. The average rate of inflation in the UK was 9.07% in 2022 compared to 2.59% in 2021. As vet practices take on higher costs this causes price increases for owners, and insurance companies need to take account of this.
Advances in veterinary medicine
Veterinary medicine sees advances in both the number and variety of treatments available year on year. For example there are now several complementary therapies available to owners such as hydrotherapy and many referral centres now offer more specialist treatments such as brain surgeries. This is fantastic news, but it does mean that owners are likely to spend more on veterinary treatments. So insurance premiums need to reflect this.
Increase in number of claims
Insurance companies pay out a massive number of veterinary claims each year. They base their overall premiums on the expected number and cost of these claims. If insurance companies are paying out a greater number of high cost claims every year, this results in everyone’s insurance premiums increasing.
Insurance Premium Tax
Insurance Premium Tax determines how much tax is charged on a policy, this is set by the Government and it can rise with each year.
Age
Unfortunately age is still a factor here. With every renewal premium, your pet is a year older. Dogs and cats age at a faster rate than humans, so every year increase in age will increase the risk of your pet developing a condition.
What do I do if I can’t afford my insurance anymore?
If you can no longer afford your insurance then the first thing to try would be to have a shop around. This will be more difficult for those with pets with pre-existing conditions as the conditions might not be covered under a new insurance policy. However some companies now offer cover for pre-existing conditions, so it’s worth having a look. Some companies also offer ‘fixed for life’ policies where the premium remains fixed.
When looking at other policies, be sure to read the policy wording carefully. Have a look at what the insurance will and won’t cover. Also be sure to check what is meant by a pre-existing condition. Claiming for a certain condition could also mean that several other conditions under the same umbrella are counted as pre-existing. For example claiming for a skin condition could mean that other skin-related conditions are now viewed as pre-existing.
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Another thing you can try is decreasing the level of your cover
So, for example, if your insurance covers £7500 vet fees per year, but you’re only claiming for £2000 a year on average, then you could look at getting an insurance policy that only covers up to this fee level. This is of course a risk, as the costs of your claims could end up rising in the future. But it might be worth considering.
You could also increase the excess on your policy – this is the amount you will pay towards a condition before the remainder is paid by your insurance. The higher your excess, the lower the cost of your insurance premium. But remember that in the event you do have to make a claim, you will be paying a higher amount yourself. So again, the pros and cons of doing this need to be carefully weighed up.
If you really can’t afford insurance, then start putting money away every month as an emergency fund for your pet. You never know when you might need it.
Conclusion
Pet insurance helps to cover unexpected veterinary costs. However insurance premiums often rise year on year. There are several variables that factor into the cost of veterinary insurance. If you find you can’t afford your latest premium there are a few things you can try to help reduce the costs.
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