Smart Money: How can insurers justify hiking up cost of my pet cover by so much? - Jenny Ross

Question: My pet insurance renewal premium for my three-year-old labrador is 80 per cent more than last year’s. I haven’t made a single claim since buying this lifetime policy, so how on earth can the insurer justify this hike?

Answer: With no animal NHS to turn to when our four-legged friends fall ill, millions of pet owners like you turn to pet insurance to help manage the cost of vet bills. A record 1.03 million claims were made in 2021, according to the Association of British Insurers (ABI), with the average claim worth £848 – though some treatments can run into the thousands (the ABI notes a case where the total bill for a puppy that needed specialist surgery for hip dysplasia exceeded £13,000).

The trouble is, the cost of pet cover itself can prove an obstacle, with ever-increasing premiums a common gripe among policyholders, especially those with older pets. A Which? survey in 2021 found that dogs aged ten-12 are twice as expensive to insure as dogs aged three or younger (£600 a year on average, versus £300).

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Which? analysis of 92 dog insurance policies found that only 16 per cent covered pre-existing conditions
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Insurers take a range of factors into account when setting their prices. Where you live is one of those: vet costs tend to be higher in towns and cities than in rural areas, which is reflected in your premiums. The breed of the pet also matters. Labradors are unfortunately one of the most expensive to insure, as they are more prone to eye problems, and hip and elbow dysplasia.

This means your premiums were probably more expensive to begin with, but it doesn’t explain the recent steep increase. Rising vet fees have played a part in pushing up insurance costs across the board, but it’s hard to see how that would translate to a hike of 80 per cent in your case.

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The good news is that your dog’s young age and no-claims history mean you may benefit from shopping around and switching to a new provider. This gets harder as pets get older, as any medical conditions they’ve picked up over the years will usually be excluded from the new policy. Which? analysis of 92 dog insurance policies found that only 16 per cent covered pre-existing conditions.

If you do find cheaper cover elsewhere, it’s also worth asking your current insurer if it can beat this price. If you’re struggling to find a price you’re happy with, you might want to think about opting for a cheaper type of policy. The one you’ve got at the moment – a lifetime policy – covers your pet up to a set amount each year and is the most popular and comprehensive option, but this also means higher premiums. Some lifetime policies set a limit on how much they’ll pay out for a specific illness or injury each year.

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Alternatively you could look at cheaper, more restrictive policies that offer a fixed amount for treatment of each injury or illness for as long as the money lasts. These are called per-condition’, or ‘max-benefit’ policies. Then there are time-limited policies, which offer a fixed amount to pay for treatment but only for the first 12 months from the start of a particular illness or injury, or the first date of treatment.

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Of course, you could go without cover altogether and opt to ‘self-insure’, by putting money into an instant-access savings account to cover any future vet bills. This has the benefit of greater flexibility and any unspent money is yours to keep – but you also take on all the risk.

You might feel more comfortable sticking with insurance but adjusting the excess – the amount you’ll need to pay towards a claim. The more you’re prepared to pay, the lower your premium should be.

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Any pet owners who don’t have pet insurance and can’t afford a vet bill may still be able to access treatment. Some animal charities, such as PDSA and the Blue Cross, provide vet services either free or at a reduced cost to pet owners in receipt of certain benefits.

Jenny Ross is editor of Which? Money

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