How are pet insurance premiums calculated?
Pet insurers do not generally publish details about exactly how they calculate their premiums, but several factors usually have a significant influence on the cost of a policy.
Premiums are calculated according to the level of cover you require, along with the insurance company's assessment of the likelihood of you needing to make a claim for your pet – and the estimated average cost of that claim.
Choosing your level of pet insurance cover
The level of cover you choose will have a big impact on the cost of your premium. Some of the more expensive policies offer 'cover for life' (or 'lifetime cover'), which covers your pet not only for urgent operations, but also for ongoing medical treatment for long-term conditions such as diabetes or arthritis. Other types of policies usually limit the payouts to just 12 months for ongoing treatment, or will pay for the same operation only once or twice, so 'cover for life' can make a big difference.
Once you've chosen the level of cover you feel comfortable with, you can compare quotes from different pet insurance providers. They each look at the 'risk' your pet poses and set their premiums accordingly – but since each company gives a different weight to each risk factor, it's always worth shopping around.
How insurers assess your 'risk' level
Insurers usually assess your risk level according to several factors, including:
- Type of pet (e.g. a small pet such as a rabbit is cheaper to insure than a horse)
- Breed of pet (pedigrees cost more to insure than crossbreeds, with some breeds costing more than others – usually because they are prone to certain expensive medical conditions)
- Age of pet (the older the pet, the more expensive it is to insure)
- Average costs of veterinary care throughout the UK
- Policyholder's location (e.g. pet owners in London may pay more, reflecting the fact that veterinary fees tend to be more expensive in the capital)
- Personal circumstances
Subtle differences between policies
Once you've chosen whether you require 'cover for life' or a more limited level of cover, look out for other differences between similar policies. Some may contribute towards alternative therapies such as acupuncture or hydrotherapy if your vet recommends them, for example, and other policies may contribute towards boarding costs if you (the owner) need to go into hospital. It's worth spending some time weighing up the pros and cons of each policy before you make a final decision.
Ways to reduce your premiums
Apart from comparing quotes and finding the best pet insurance deal, you may also be able to bring down the cost of your premiums by opting for a higher excess, or boosting your pet's security (e.g. by micro-chipping your dog).