The Ins & Outs of Pet Insurance
Do you know the ins and outs of Pet Insurance? We’ll teach you the hard parts, explain the jargon and tell you what you really need to look out for!
Insurance is changing and with it the way in which we traditionally shop around! Pricing is a constantly changing factor and we’re seeing insurers come up with new ways to offer policies at lower prices. This has had a knock-on effect meaning pet insurance in the UK is getting more and more complicated, full of confusing jargon and terminology with a range of new policies constantly entering the market.
So what does it all really mean?
1. What is this term “Coverage”?
First up, just keep in mind that the main reason for buying pet insurance is to 'cover' vet bills and when you see the word 'coverage' this relates to the maximum amount of money that an insurer will pay for the vet bills.
For example, if you buy a policy with a coverage limit of £1,000 and you receive a vet bill for £1,500. You will be able to get your insurer to pay out £1,000, and you will have to pay for the remaining £500.
According to the Association of British Insurers (ABI), the average claim for pet insurance is now over £700. If you have two claims in a year (at the average claim rate) that would mean £1,400 and three claims £2,100… you get the idea.
So when looking at coverage, you need to consider the type of costs your pet is likely to incur, breed, inherited breed conditions and chronic conditions in mind. If unsure, seek out advice from your breeder, similar dog owners and a vet.
Here at Waggel we also have a range of experienced & knowledgeable people in our team from Insurance specialists, behaviourists and pet nutritionists and more that can help offer a range of advice via our online chat when shopping around for a quote or looking for ways in which to improve your pets diet, health and so forth. Don’t fret or feel lost, we’re always on hand to offer advice.
The Waggel Way: We always want to do what's best for you and your pet and that means including your budgets and bills. We hate the idea you could get lumped with a bill you won’t be able to pay for, that's why our policies start at a minimum of £1,000 coverage! Even better yet, we give you the ability to adjust this coverage all the way up to £10,000 (if you should need it)
2. Types of policies
There are four main types of pet insurance policies on the market:
- Maximum Benefit
Let’s say that your pet has a claim for diabetes for £500 with a coverage limit of £2,000 as an example. How would this work with these different types of policies?
Accident-Only: You wouldn’t be able to claim on this type of policy as it only covers accidents like broken legs.
Max Benefit: You will be covered for £500 and will only be able to claim for another £1,500 for diabetes. Once you have claimed for the remaining £1,500, it will be noted as an exclusion in your policy, and you will no longer be covered for diabetes again. Max Benefit usually covers each new medical condition up to a financial limit, for as long as your policy remains in force, essentially (there is no time limit on your claim). This means you can continue to claim more than once for a certain condition, year after year - But once the financial limit is reached, the condition (in this case Diabetes) becomes a pre-existing condition and will become excluded from future claims.
Time-Covered: You will be able to make a claim for £500 and from the date of the claim, you now have 12 months to claim for everything related to diabetes for the remaining £1,500. After the 12 months are up, you will no longer be able to make a claim for diabetes again, and this will be noted in your policy as an exclusion. Basically, this limits you on chronic or repeat conditions.
Lifetime: You will be covered for £500 and will have £1,500 of coverage for diabetes for the remaining policy period. If you renew the policy, the limit refreshes, and you will be able to claim up to £2,000 again for anything related to diabetes again.
The Waggel Way: We believe that Lifetime policies should be the only policy in the market as with other policies people can be prone to end up with nasty surprises! We want to be there for you and your pet throughout their lifetime, not a short term, quick turnaround game.
3. Per Condition vs Annual Amount
Now you know the different types of policies that exist, the next is figuring out how coverage works. There are mainly two ways coverage works: Per Condition and Annual Amount.
We’ll use an example to give you an idea of the difference.
Example: Let’s say that your policy has an annual coverage limit of £1,000, and your pet has to go to the vet three times in the year for entirely unrelated conditions, the first time vet bill for a broken leg = £500, the second one is for diarrhoea = £300 and the third is for skin allergies = £500. A total of £1,300
Per Condition: you have £1,000 worth of coverage for each condition, which means that every condition will be covered.
Annual Amount: you have an annual “pot” of a £1,000 which means that you will be covered for £500 for the broken leg, £300 for diarrhoea and will only have £200 covered for the skin allergy, which means you would have to pay the remaining £300.
While you might think Per Condition is the best considering that you could make 5 claims and essentially have £5,000 worth of coverage, here is where insurers are smart. They know that most people only really make a claim once or twice a year and that most of the time it is for the same conditions.
You will find when you are shopping around that a £1,000 Per Condition policy is around the same as a £2,000 Annual Amount policy.
The big thing to note for per condition policies is the term bi-lateral conditions, which states that anything that happens to one side of your pet will also count for the other.
So let’s say your pet goes in for a problem to their right hip that ends up costing £700. The right hip leads to issues on the left, so you have to take your pet to the vet, and you receive a bill for £500 for the left hip.
Per Condition with £1,000 limit: You will be covered for the first £700 bill and because left, and right are seen as the same due to bi-lateral conditions, you will now only have £300 left for hip conditions meaning that you will have to pay out £200 of the claim.
Annual Amount with £2000 limit: You will be able to claim for both hips and will still have £800 left to claim for other conditions.
To make things even more complicated, insurers have now started to combine Per Condition and Annual Amount as a means to offer cheaper policies. This means that a policy that provides £500 per condition with an annual limit of £2,000 is saying that you can have 4 conditions of a maximum of £500, which would then reach your annual limit of £2,000
The Waggel Way: We only offer Annual Amounts as we believe that is the easiest to understand. Simple as that.
4. Pre-existing Conditions - The inability to switch
The price will always be a primary determining factor when it comes to choosing insurance. But one of the major things to be aware of is when picking a policy and making a claim, it limits you to your insurer. Why is this? Most likely changing insurers can affect and increase your policy and premiums.
Looking at claim records, the most likely time most pet owners claim is throughout the age of puppy and kittenhood and before they reach maturity - this usually means eating the wrong things, chewing, vaccinations and general health whilst they bash into everything in their way.
Insurers are smart and know this after years of claims and some employ a strategy to put out a cheap policy for young pups and kittens with the knowledge that once you’ve made a claim you are going to struggle to switch meaning that they will be able to increase your price and you’ll be stuck!
Now don’t panic, insurers are not allowed to increase prices unfairly but unfortunately, you will be limited to choice. You will be left with two choices, stick to your current insurers as they increase your prices or go with a new insurer who will place claims under pre-existing limiting you from claiming for that condition again.
The Waggel Way: We will never claim to be the cheapest, and our prices are carefully worked out so that you don’t get any nasty surprises like unjustified price hikes. We want our customers to stay and renew with us as much as possible, that’s why offer add-on benefits such as discounts, rewards, and great customer service.
Also referred to as co-insurance, usually this only applies to older pets, but is becoming increasingly frequent by insurers to make insurance more affordable.
Let’s say that you have a policy with an annual limit of £2,000 and your dog receives their first vet bill of £1,000 for a new condition.
You will have to pay the original excess, say £100, and 20% of the total bill, which is £200 (£1,000 x 20%). That means your total payment towards the bill will be £300, and the insurer will pay the remaining £700.
If your pet goes back to the vet during the same policy period and receives a vet bill of £500 for the same condition, you will only have to pay the 20% co-payment. That means you will have to pay £100 (£500 x 20%) and the insurer will pay the remaining £400.
The Waggel Way: Waggel is the process of implementing an adjustable co-payment so that again you are given a choice on whether you want to include this or not.
Unfortunately, pet insurance has evolved over the years to become a mesh of confusing coverage options mixed with complicated terminology. Waggel aims to cut through all of this and provide pet owners with a policy that is simple and easy to understand.
Have any questions? Get in touch with us today and we’d be happy to help!