The 5 things nobody told you about pet insurers

Often complex and confusing to some, insurance isn't as baffling as you might expect. Take a look as we lift the lid on the workings of pet insurance.

The key things about pet cover you need to know

Let’s be honest pet insurance is boring. In fact, all insurance is boring!

We can’t think of many people that wake up in the morning and look forward to buying or renewing their pet insurance policy. However, that’s part of the plan and why we’re here to try and make sense of pet insurance. It is difficult, but it pays to persevere when reading policy documents.

Below we’ve highlighted 5 areas that most people don’t know about pet insurance which can be handy to know when trying to find cover.

1. Pet insurers aren’t sophisticated (they baffle you with complicated wording, exclusions and terminology)

Pet insurance isn’t initially as complicated as it sounds. However, complicated policy wordings, exclusions and lengthy definitions create the impression of a deeply sophisticated product which is often difficult to compare. While, in reality it is pretty straightforward.

At is simplest, insurance offers a monetary payout to cover you when you incur veterinary fees or costs caused by your pet.

Most providers offer cover for the same features their limits are just a little different. Generally most pet insurers cover:

As well as these product features, most providers offer additional benefits such as:

  • 24/7 vet line and telemedicine
  • Multi-pet discounts
  • Switching insurance without the waiting period

In fact the main areas where providers will be different are:

Each company will have its own details which is why it is important to read the policy wording and IPID (insurance Product Information Documents) when considering taking out a policy. Interestingly, look for the Fairer Finance logo on policy wording. Fairer Finance is an organisation that works with insurers to simplify their policy wording for the benefit of customers – Bought By Many have worked with them to create more accessible policy documents.

Away from the cover, what else that leads us to believe that pet insurance isn’t that sophisticated is the importance on very few factors. We’ll have a look at the effect of postcode on price below, but along with postcode, breed and age have an extremely important factor on the price you receive. There tends to be very few other factors with the importance that these three have.

2. Where you live has a profound impact on your price

As we mentioned above, pet age, pet breed and postcode are the 3 factors that will influence the price of your premium. The importance of these factors and the price impact of these factors are determined by actuaries working for insurers and underwriters

To understand how premiums are calculated, and why postcode has such a big impact, we need to understand what insurers are targeted against, which is something called loss ratio.

The loss ratio is the difference between the amount of premium written by an insurer and the amount they pay out in claims. It is usually expressed as a percentage, so for example if for every £1 of premium received 80p is paid out on claims then the loss ratio is 80%.

Each insurer will have a different loss ratio target so this means they can be more or less aggressive in terms of pricing for customers or are more comfortable insuring riskier breeds or insuring pets in riskier postcodes.

In order to identify riskier postcodes, insurers will look at where claims come from as well as veterinary costs in each location. This is generally why urban areas and cities are more expensive than rural postcodes.

3. Where you get your treatment can save you money on your premium

It’s not something that is well known or actively promoted by pet insurers but there are some larger providers that have a network of vet practices or a relationship with big vet providers such as Medivet or Vets4Pets which offer preferential rates on vet treatment.

This means that if you use the vet in their network then this results in lower fees for the insurer and that can result in lower claims and therefore better renewal pricing for you when the time comes.

Of course, you can still use whichever vet you prefer and if you need emergency treatment you may not have a choice but to go out of network, but for non-emergency treatment it may be beneficial to use their recommended vet practices.

Explore our 8 tips on saving money on vet treatment.

4. Nobody has found a way to deal with pre-existing conditions

Treatment for pre-existing conditions is something that nobody is doing particularly effectively in the UK currently. The most comprehensive pre-existing conditions cover is probably with Direct Line (although to get a quote you must call them) or Petwise (where you can quote online). You would need to declare the conditions and then the insurer will tell you whether they are able to accept the condition on cover.

Other approaches to pre-existing conditions aren’t strictly pre-existing cover, but allow you to get cover for existing conditions for a lower cover limit for the first 2 years of cover if you do not claim. This is the case with Bought By Many.

Cover for pre-existing conditions is something that the Financial Conduct Authority is pushing for insurers to offer, and more recently price comparison websites are trying hard to find a way to include cover on their sites. So we hope in future that this becomes more widely available.

5. You’re buying from a list of just 24 insurers

Most people don’t know it but when you’re buying an insurance policy you’re buying a pretty standard product across the market. Whilst in the UK there are 57 different companies that appear to sell pet insurance, they are underwritten by a smaller proportion of insurers, just 24.

For example, if you bought a policy from the Post Office, Sainsbury’s Bank, Itch or Everypaw then actually you’re buying a policy underwritten by the same insurer, Pinnacle.

This doesn’t normally make any difference, you’ll still be dealing directly with the provider rather than the underwriter, but be aware that the underwriter does impose restrictions on the kind of policies the brand can sell, for example certain breeds may be restricted.

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