Pet Insurance Perils

by Dr Megan

With no Medicare for pets, planning for unexpected veterinary bills is important. Young animals can get themselves into mischief eating inappropriate objects or break limbs falling off beds/couches. Older animals have a greater likihood of developing serious illnesses like cancer. Whatever the age, chronic illness such as skin allergies or arthritis can add constant expense to your pets’ care.
Pet insurance is great safety net and we love when we don’t have to cut corners on health care for your 4-legged family members, in order to squeeze into a tight family budget but insurance companies main aim is to make a profit so when considering taking up a policy there's a few hazards to watch for.

Payment Method
If you have health insurance of your own, you’d be used to the hicaps system – so when you go to the dentist or physio you just pay the gap cost between the charges from the provider and what insurance covers. Traditionally though pet insurance have been a user pays model. So you need to pay the vet bill in full, then a few weeks later, once reviewing your claim, insurance would make a reimbursement to your bank account. The problem with this system is that you need to have enough cash/credit to be able to pay the bill to start off with. These days things have improved and there is a now a ‘gap only’ system that can integrate with most veterinary clinics, however there are still some insurers that require you to stump up the money first.

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Excess amounts
The final area of difference between pet insurance and the other types of insurance that families would be familiar with (car, house) is in the structure of the excess. For most car insurance, there is a fixed cap amount you need to pay and then everything beyond that is covered by insurance. Pet insurance however on the most part works on a percentage excess. So while that mightn’t be a problem to pay 20% of a $200 visit for consultation and medication, when it’s a $3000 dollar visit to emergency, you’re still out of pocket $600! It’s worth looking at what the excess amounts mean for your family on a larger bill or consider options that might have a fixed excess amount.
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Pre-exisiting Conditions
Taking out a policy on your pet after they have had health issues, is a bit like get car insurance after an accident. The insurers are not going to cover for anything that was documented as being a problem in all the time before the policy started. If you’ve mentioned problems to us and we’ve put it our clinical notes, they typically will exclude that body system and for high risk breeds (French Bulldogs and Dachshunds we’re looking at you!) that will sometimes have blanket exclusions on any problems they can argue the dog was born with and therefore you were aware of at the time of purchase. So it pays to take out insurance as soon as you get a puppy or kitten, before anything can go wrong, and read the fine print on their exclusions related to congenital conditions.

General exclusions
Although we are seeing more progressive insurers changing on this front, for the last 2+ decades pet insurance has excluded two whole body systems from cover. Namely, anything to do with teeth, because they claim it is preventable, although we see plenty of problems that owners can do nothing to avoid on that front (cat resorptive lesions and broken teeth in dogs to name a few), and behavioural (mental health) problems.

Injuries vs Illness
Another method that insurance companies use to ‘discount’ premiums is to offer injury only cover. While this might sound good, and it’s reassuring to know that if you pet was struck by a vehicle that they would be covered, there’s lots of shade of grey with claims. Is a puppy eating a sock an ‘injury’ or an ‘illness’? And often the most expensive care occurs with chronic illness such as heart disease or skin allergies, neither of which are covered by the basic policies.

Sub Limits
To make policies seem affordable, one tactic insurance companies take is to have sublimits. So while the policy might state that they will cover your pet for up to $30k worth of vet bills, buried in the policy documents will be a section stating that for select conditions - typically tick paralysis and cruciate ligament rupture (dogs) that they will  pay out $3k. Coincidentally (not!) the two most commonly claimed problems are…tick paralysis and cruciate ligament rupture. And treatment costs for ticks typically range between $2-10k and the standard recommended option for cruciate ligament repair is $5-6k. This leaves the pet owner substantially out of pocket, but saves the insurance companies a mint. It’s best to avoid policies with any sub limits.

Although we are not allowed to advise on insurance providers, considering these common traps can help you navigate deciding between the different options that are out there in the marketplace.