Pet ownership is expensive, especially when your pet is sick or injured and vet bills are mounting. That’s where pet insurance can save the day (and your money). We’ve got all your answers if you’ve looked at some pet insurance policies and wondered why they’re priced so differently.
We’ll break down what can affect pet insurance premiums, so you know what to look for when getting cover for your four-legged friend.
Your premium is a fixed amount you (the policyholder) pay each month to maintain your pet’s insurance cover. This payment covers the risks associated with your insured pet and your liabilities under your policy.
Pet owners can lower their pet insurance premiums by increasing their policy excess (a deducible sum with each claim) or may opt to pay higher premiums for more comprehensive coverage.
Pet insurance premiums are calculated based on the likelihood of claims, which is why age and breed in particular play a big part in the assessment process. That’s because different species and breeds have varying healthcare needs based on genetic predispositions to different conditions and health issues.
Unlike health insurance for humans which is community-rated, pet insurance is risk rated which means two pets covered by similar pet insurance policies could attract starkly different premiums.
Pet insurance premiums are calculated based on several factors, usually including (but not limited to):
Another factor to keep in mind is that pet insurance premiums increase each year. The reason for this is generally twofold:
Beyond the factors that your furry friend brings to the mix, pet insurance premiums hugely depend on your choice of insurer and the policy you choose. Here are the main types of pet insurance policies available to pet owners:
Another factor that may influence the price of pet insurance is your co-payment or excess. An excess is the sum you need to contribute towards a pet insurance claim. It’s normally $200, but this can vary depending on your insurer and level of cover. Fortunately, insurers often allow you to choose your excess or remove it entirely (in some cases), although this will bump up your premium. On the flip side, you could opt to increase your policy excess which will reduce the cost of your annual premium.
Keep in mind that the excess is subtracted from the insurer’s payout and, as a result, a higher excess will mean you’ll be paid less by the insurer when you make a claim.
As well as a policy excess, all pet insurance products include a benefit percentage that typically ranges from 70% to 90%, but some may be lower or higher. The benefit percentage is the percentage of the bill that the insurer will pay, and the pet owner will cover the rest. Some insurers will deduct the policy excess prior to applying the benefit percentage, while others will apply it after.
Here are two examples of how the policy excess can be applied to your claim.
When the excess is deducted before the benefit percentage is applied:
Suppose you incur a vet bill of $1,000, your pet insurance policy excess is $200, and the benefit percentage is 80%. If your insurer deducts the excess before applying the benefit percentage, then:
When the excess is deducted after the benefit percentage is applied:
Say you get a vet bill of $1,000; your pet insurance policy excess is $200, and the benefit percentage is 80%. If your insurer applies your benefit percentage first, then:
However, if you choose a policy with no excess and your policy has a benefit percentage of 100%, the insurer will pay the totality of the vet bill (subject to conditions and exclusions, and sub-limits may apply). Keep in mind that the benefit percentage (and your premiums) increases as the policy excess decreases.
When taking your pet to the vet, you might have to pay the whole bill upfront and then lodge a claim with your pet insurance, though some vets can charge your insurer directly, leaving you with the remainder of the bill to pay as well as any excess payments.
The average cost of pet insurance can vary between $25 and $80 per month.1 However, premiums depend more or less on your pet’s circumstances and your budget. Be sure to compare policy prices from multiple insurance providers before deciding on a cover option.
Making multiple claims throughout the year could increase your pet insurance premiums in the following year to reflect your pet’s increased risk and the probability of more claims on your policy in the future. Pet insurance premiums take into account the number and value of previous claims, in addition to factors already mentioned. Remember that pet insurance premiums typically increase each year as your furry companion gets on with age (regardless of whether you claim or not).
When it comes to comparing pet insurance policies, you should first consider the price of the premiums, along with the following:
Use our pet insurance comparison service to easily compare pet insurance quotes by price, features and more.
If you own a registered guide dog, they need additional insurance cover. A policy that covers Third Party Liability covers your legal liability if your guide dog injures someone (or their pet) or causes damage to someone’s belongings or property. This may come at an additional cost to standard pet insurance cover.
You don’t have to choose between your pet and your wallet when there are ways to reduce your pet insurance premiums.
Use our pet insurance comparison service to compare pet insurance policies by premiums, level of coverage, and features. Our service is free to use and can collate a number of policies from different insurance brands in Australia in just minutes. And you can apply for cover straight away, too.
Simples!
1 Obtained from completed quotes on our comparison service. The cheapest quote was for a young (< 1 year old) Ragdoll cat, de-sexed, in Brisbane. The dearest quote was for a young Labrador, de-sexed, in Brisbane, with the highest possible benefit percentage and highest annual limit, and all options included (27 March 2023).
