Making sense of Pet Insurance

For the same reasons that we take out medical aid cover for ourselves and our dependents, so we consider the risk of extraordinary veterinary costs arising for our pets, and consider the benefits of getting medical cover for them too.

It is crucial to understand that not every pet medical insurance plan is created equal. This does not necessarily mean that some are better than others, it simply means that it is important to consider what it is that you’re needing from a pet medical insurance product in the first place, and how a specific product provider can address your needs.

Understanding the need

The most critical aspect of any pet medical insurance product, is its ability to cover any exceptional medical costs should they arise. Products like these are not generally there to offer soft benefits, or cheaper gym contracts. No, they are designed to save you from being financially clobbered should your pet require expensive medical care.

Most pet owners can afford typical routine veterinary costs that one might expect when owning a cat or dog, but pet owners don’t always have R20, 000 lying around in the event that their dog requires surgery.

We say that this feature is critical, as it embodies what medical insurance is all about – settling your medical bills. If the main reason for choosing to take out pet medical insurance in the first place is to mitigate against the risk of unaffordable vet costs arising, then you want a product that is designed to settle large costs.

How do you go about ensuring that your choice in provider will meet your needs in this regard?

Consider the terms and conditions with regard to Annual cover limits, and Individual claims limits.

Annual claims limits and Individual claims limits (sub-limits)

An annual claims limit is simply how much your pet medical insurance provider will pay you per year for each pet in aggregate for all claims made. This may be an amount of R30, 000, R40, 000, or even unlimited. Each product will have their own benefit limitations.

Similarly, each provider is generally only prepared to pay you up to a specific amount on each individual claim. By way of an example, repairing your dog’s cruciate ligament may cost R25, 000 based on a cost estimate from a vet, however your provider of medical cover may only be prepared to pay a maximum of R20, 000 for any one claim. You would need to pay the shortfall.

Understand what exactly the limitations are on your proposed choice of cover, and consider if that product still meets your needs.

The Excess

No discussion on insurance would be complete without a mention of ‘the excess’. Just like short-term insurance on your car, the excess amount is the amount that you must pay, before your provider will pay anything. The purpose of the excess is to prevent claimants from adopting risky behavior, in this case – with their pets, and minimizing the loss that the insurance risk pool faces, by essentially limiting losses from smaller events.

By way of an example, Insurer A has a R200 or 10% Basic excess, while Insurer B has a R500 or 25% basic Excess.

Scruffy the dog suffered a broken leg and internal injuries and requires medical treatment with an estimated cost of R25, 000.

All else being equal, the Excess payable by yourself on Insurer A would be R2, 500 whilst the Excess payable by yourself using Insurer B would be R6, 250.

Price

Like many financial products, price alone shouldn’t necessarily be the sole reason for choosing one product over another. If competing products were perfect substitutes and all else being equal, then it would make sense to choose the cheaper option. That being said, insurance products are seldom the same, and one needs to dig deeper into the policy benefits to ensure that what you’re buying is appropriate for your needs.

The age of your pet

The maximum entry age at which most providers generally provide medical cover for new pets, is eight years of age. This is done to manage the risks of more expensive medical risks arising for older pets. Likewise, it is generally only after your puppy or kitten turns eight weeks old, that they can be covered. For those pets that are older than eight years of age, an ‘accident only’ policy is generally taken out, which provides the same degree of medical cover for your pet, but the cover is limited to costs arising as a result of an accident, and not for illness-related conditions.

Most providers will continue to provide cover after your pet has reached the threshold age of say, eight years old, but just be sure that this is the case.

Breed exclusions

No product will generally turn a particular breed of pet away, but they will limit the benefits that certain breeds can enjoy. By way of an example, certain dogs are more predisposed to hip-related degenerative conditions, which some providers will not cover. Some will however cover your pet for all conditions, regardless of their breed.

If your pet is of a particular breed that is known to have breed-related medical issues, then consider an insurance provider who does not limit cover in this regard.

Waiting periods

The industry standard is a thirty day waiting period for all claims, meaning that you cannot claim any benefits under the policy until the passing of thirty days. This should NOT however exclude any medical costs arising from an accident or trauma to your pet.

Pre-existing conditions

Very few pet insurers will cover your pet for pre-existing medical conditions. This should come as no surprise. You’re probably more familiar with motor vehicle insurance and know that you can’t insure your car after an accident to try and get the damage repaired. Pet medical insurance is there to protect you from unforeseen veterinary costs, and not those that you are aware of.

In this regard it is also important that you understand what “medical underwriting” is.

Underwriting

Underwriting is simply an industry term for the process whereby the insurer fully comes to understand the medical risk that they are insuring. Some providers choose to perform their underwriting at the time you apply for cover. This may include medical questions on the application as well as the underwriter requesting supporting information from your vet. It is important that you disclose all previous conditions as non-disclosure could result in a claim being rejected and even the cancellation of the policy.

Other providers choose to perform the necessary underwriting at the time of claiming. So should you submit a claim for hip dysplasia costs for your German shepherd, your provider will at that time ask your vet to submit a report on the prior medical issues identified for your pet, and whether any of those pre-dated your cover start date.

Conclusion

Insurance is not generally a complicated product to understand, but insurance in the pet industry does have its own set of specific features that should be understood prior to taking out any cover. We trust that the above does go some way in helping you find the best cover for your need.

Insurance by design, is a very effective way of protecting yourself against a large loss, in exchange for parting with a much smaller monthly premium. If the thought of being confronted with possibly insurmountable vet bills scares you, then take some time to see what options are out there, and which cover might be best for your needs.

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