Categories: insurance

Is pet insurance worth the cost?

I don’t think that pet insurance is worth the cost and I’ll tell you why. There is a better alternative. It is very hard to provide a figure for the cost of an average insurance premium because it depends upon the companion animal being insured and of course the type of insurance that you taken out.

Pet insurance is like gambling

However, my research indicates that you may pay around £30 per month in the UK. I should think the premiums in America are not too dissimilar. The average claim for veterinary treatment in 2017 was about £750 in the UK.

I tried to find out how often pet owners made a claim under their insurance policy. I can’t find information (perhaps it is deliberately witheld) but I will guess. I would have thought that, on average, a major operation or treatment that requires payment under a insurance policy wouldn’t take place more than once or twice during the lifetime of a companion animal. Of course this depends upon the animal’s general health.

I’ll get to the point now. If you saved £30 per month, every month for the lifetime of a companion animal and if the lifespan of that animal (let’s say he’s a dog) is 15 years, you would have saved £5,400. Interest rates on savings are insignificantly low at present but even bearing that in mind you could add a few hundred pounds on top of this figure. So let’s say that your savings add up to about £5,700. That should be more than enough to pay for two treatments with a lot of money left over (£5,700 – about £1,700 = £4,000).

If you paid £30 to an insurance company over the lifespan of your companion dog the money would go towards the high salaries of the staff of the insurance company, the rental for the offices of the insurance company, their insurance policies and numerous other overheads. So the £5,700 that you would have saved after 15 years would probably equate to something like half that (£2,850) in terms of the amount of money available to be paid out under your policy for treatment for your companion dog.

Pet Health Insurance

Save the money that would have been insurance premiums

The conclusion therefore must be that it is best to save money and invest it and in doing so create your own personalised insurance policy rather than giving it to somebody else who is liable to rip you off through terms and conditions which you missed and which prevent your dog obtaining treatment. And let’s be honest, insurance companies are very profitable businesses. They are in the business to make money for themselves. They are not nonprofit charities with animal welfare on their minds. The people who run the companies, the directors and the senior managers are in the business to make as much money as they can for themselves and their families. This is why they hate to pay out and find any excuse possible to avoid it.

You can see why my personal choice is to avoid them and run my own personal insurance policy by way of savings. As it happens most other people are in agreement with me. In the North American pet insurance market, the total number of pets insured during 2018 reached 2.43 million. As there are about 160 million combined pet cats and dogs in America, I conclude that a tiny fraction are insured. It is also worth noting that 88.9% of the insurance policies are written in respect of dogs and not cats. Therefore a tiny percentage of cat owners have decided to ensure their cats for pet health. They agree with me largely. Or they don’t even consider an insurance policy because they haven’t got the money. They take the risk but they also don’t take their companion cats to the vet often enough. We know that too. There is a general widespread neglect of cat health in my view.

However, that’s not particularly relevant to the question being asked. The answer on my equation is no. Save the money instead. Don’t give it to the fact cats!

Risk, reward, spreading the burden

In Sweden where pet insurance started a hundred years ago, almost half the population ensure their pets for health problems. This is not quite half the population after 100 years of being able to do it. I wouldn’t call that a great success story. The Swedish pay relatively high taxes. They don’t mind paying taxes. They see the social benefits in paying taxes. It’s a part of their culture and I think that transfers to their high rate of pet insurance. It’s a kind of spreading of the burden which is what pet insurance really is.

If a group of people take out pet insurance, a percentage of them will “win” by receiving veterinary treatment for their pet which costs a lot more than the amount of their premiums paid and a percentage will “lose” by paying out a lot more in premiums than they get back in veterinary treatment. And there are those in the middle ground whose companion animals receive the same in veterinary treatment as is paid out in premiums.

It’s about risk and spreading the burden of that risk. This should be taken into account. It has occurred to me there is another reason why dog owners take out insurance rather than cat owners. It is because dogs are generally less healthy. This is because they are much more often purebred and the breeding of an animal generally slightly undermines the health of that animal. It’s called inbreeding depression and purebred cats if they are bred closely for appearance can end up being less healthy than random bred cats as a result.

Pet insurance forces up veterinary fees

There is another downside to pet health insurance. It forces up veterinarian’s fees. This is because an insurance company is paying the fees. The individual staff member in and insurance company is distanced from the veterinarian. The parties meet each other. It’s a business transaction. There is no personal vested interest. If a pet owner deals with veterinarian they discuss the cost of the treatment are more concerned. There will be downward pressure by the pet owner on the veterinarian’s fees.

Pet insurance introduces a slackness into the management of veterinary fees. This is one reason why they consistently go up year-on-year.

Increase income tax by a very small amount to pay for all veterinary services

There’s a good argument that income tax should be increased by a very small amount by every individual in the country. The money raised would go towards paying all veterinary fees. The services would be free at the point of delivery. This would dramatically improve the health of companion animals. Of course it would mean that non-pet owners would be supporting pet owners but if the amount was very small they would accept it in the interests of a general improvement in animal welfare across the country. Or there could be a combination tax plus insurance policy scheme.

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Coronavirus pandemic: Are veterinarians ‘key workers’ and are their businesses ‘essential’?

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Can I bring my cats in carriers to the vet with Uber?

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Michael Broad

Hi, I'm a 71-year-old retired solicitor (attorney in the US). Before qualifying I worked in many jobs including professional photography. I have a girlfriend, Michelle. I love nature, cats and all animals. I am concerned about their welfare.

View Comments

  • When you put in the claims yourself no one knows that you have insurance. That said, when I was a kid and health insurance wasn’t that prevalent, my tonsillectomy cost the same as the kid upstairs because her parents got a discount for not having insurance. The system gets you coming or going, I think.

  • I have found, by my own practice/experience, that while there's not much you can to mitigate the things no one can do much about (accidents, poisonings, etc), the best insurance is to make and keep your pet healthy. The best way to do that is to do the hard research and make the effort to feed them the best food you can afford, and keep them physically safe and emotionally happy. I have eleven cats now and aside from routine visits I haven't had to take them to the vet in years.

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