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Although a pet may not cost much to buy, it can be hellishly expensive to maintain it in a good state of health. But is pet insurance worth the money? Personal Finance takes a pooper-scooper to what's on offer.
One in three pets in the UK will require treatment for illness or injury each year, and advances in veterinary treatment mean that sick and injured pets can often be coaxed back to good health. This is good news for pets and their owners - until the vet's bill arrives.
Vets don't use a standard fee scale, and costs vary widely around the country. For example, depending on where you live, it can cost between £250 and £2,000 to treat a dog with a broken leg and bills are getting higher. "Vet's bills are escalating," says Alastair Cook, marketing manager of Petprotect. "This is largely due to the growth in specialist practice." Gail Quinn, director of brand for Sainsbury's, agrees. "Vets' fees are increasing by 10 to 12 per cent a year and, despite the rising health risks facing pets, only 12 per cent of dogs and 7 per cent of cats are insured." So taking out insurance could save your pet and save you money.
Pet insurance, once riddled with clauses and exclusions, is becoming simpler to understand and easier to buy. Petplan and Petprotect are still the largest pet insurers in the UK, but low cost insurance is now available from supermarkets such as Tesco and Sainsbury's. Other providers to enter the market-place include Animal Friends Insurance.
It charges one premium for dogs or cats, regardless of breed or where they live in the country. The company doesn't take profits from the premiums it charges. Instead the money goes to animal welfare and environmental causes.
According to a survey commissioned by Tesco, only one in 12 pet owners has insurance. The main reasons for not having insurance were: it was too expensive, owners simply didn't get around to it, forgot, or didn't think it was worth it.
Insurance is not just for pedigree pets either. "Because of inbreeding, pedigree pets do tend to have more problems as there is a greater chance of inherited medical defects, but pet insurance is for things that you don't expect to happen, such as road accidents," explains John Bower, senior partner at a veterinary hospital in Plymouth and former president of the British Veterinary Association (BVA).
And while cost is an important consideration, cheapest isn't always best. Make sure that your policy does provide adequate cover and that the insurer will pay up when the chips are down. Bower recommends choosing a policy that provides adequate cover for medical conditions. This is around £2,000 for anyone outside London and up to £4,000 for Londoners.
"There are three key differences between policies," explains Petprotect's Alastair Cook, "and these all relate to benefits," he adds. "First, you need to make sure you have ample benefit for medical conditions." He suggests opting for a policy providing around £4,000 a year. "Second, you need to check limitations, for example the time period over which you can claim." If a policy limits a claim to, say, a twelve-month period rather than a financial limit, then you could run into problems if your pet develops an ongoing condition.
"The third consideration is lifelong cover," says Cook.
Insurance for horses and ponies is essential. Vet's bills can be huge and if you lose a horse through illness or accident you will have to pay to replace it. Insurance will also cover your tack and equipment up to a specified limit. The same exclusions and limits apply to horse policies, but limits tend to be higher. For example, Petplan will pay up to £5,000 per incident to cover vet's fees. The policy also includes £10,000 per annum personal accident cover and £1,000 per annum dental cover. So if you have an accident while riding your horse, you too will be covered. Obviously, premiums are higher. Expect to pay around £100 for every £1,000 sum insured.
Your local riding stables or vet will be able to recommend a good policy. See below for contact details.
If you have more exotic tastes in animals, you'll still need to consider insurance. Unusual birds and animals are particularly at risk of being stolen as, more often than not, they're quite valuable. If you belong to a club or association it should be able to recommend suitable insurance. See the contacts box opposite for contact details of specialist insurers.
Many pet injuries and illnesses can now be treated and insurance does enable vets to carry out more complex procedures, so there is a good chance your pet will be saved. "Pet insurance costs only around £2 a week - about the same as a pint of beer," says Bower. "There is nothing more distressing than seeing a sick or injured animal and knowing that the owner can't afford to pay for treatment."
Insurance will help to lift the financial burden if the worst comes to the worst, but as with all insurance, it's only worth having if you have to make a claim. If you have the means to foot a large bill then you may not need insurance. But if a large vet's bill would seriously affect your budget, it's probably worth paying the monthly premium. If you baulk at the idea of forking out yet more money to an insurance company, the alternative is to save some money each month in an instant access savings account. This can be used towards vet's bills and your money will be earning interest. But this won't help much if your pet falls ill one month after opening the account.
According to Bower, the most important features to look for are third-party liability and medical cover. All policies offer third-party liability between £1 million and £2 million. If you want high medical limit, consider Petplan and Petprotect. They both have a vet's fees limit of £4,000. Petplan charges £5.28 for cats and £8.85 for dogs. Petprotect charges £6.25 for cats and £8.91 for dogs. These policies offer lifelong cover too. Other policies offering lifelong cover are Animal Friends and Sainsbury's.
The over 50s should consider SAGA. It's medical limit is £2,000 and monthly premiums for cats are £2.56 and £5.25 for dogs.
The cover available will depend on the level of policy chosen. Standard dog and cat policies will cover you for the following:
Vet's bills up to a maximum limit. Your policy should pay out for each course of treatment, including hospitalisation. Look for policies that offer lifelong cover. That means that if your pet is diagnosed with an illness that would require permanent treatment - such as a skin condition - your policy will pay out for as long as treatment is required for the remainder of the pet's life.
Pet boarding costs. Most policies cover kennel or cattery costs if the owner is taken ill and has to go into hospital.
Advertising and reward. Policies may pay for advertising and a reward if your pet is stolen or strays.
Death and theft. If your pet is stolen or dies due to injury or accident, most policies will pay out the purchase price or replacement value of the pet.
Third party liability. A policy will pay out if your pet causes damage or injury to another person or its property.
Holiday protection. Some policies pay out if you have to change your holiday plans because your pet is ill.
Some policies will offer added extras. Churchill, for example, has a 24-hour helpline. The helpline will give legal advice if needed, can help locate your nearest vet and will offer support if you are struggling to come to terms with the loss of your pet. Tesco too has a bereavement helpline. "This can be helpful if pet owners have to break the news to a child," says Fay Hogg, a spokesperson for Tesco Personal Finance. Tesco gives a discount of 5 per cent if you insure more than one pet. If you take out a Deluxe policy with Primary Direct, the policy will pay up to £100 for travel to the vet and up to £300 for alternative treatments.
If you are taking your pet abroad under the government's pet travel scheme (PETS), you will need to find a policy that provides adequate cover. Our table on page 71 gives costs of pet travel insurance.
As with all types of insurance, pet policies do have exclusions.
Excesses. You will have to pay an excess for some claims. This ranges from £25 to £80, depending upon the type of claim.
Policy limits. Some insurance policies will pay out a maximum figure in one year for vet's fees. Others will pay out a maximum per claim for illness or accident. Tesco, for example, pays up to £2,500 vet's fees per condition. Churchill pays up to £3,000 for each course of treatment.
Age. You may not be able to take out insurance for the first time if your pet is above a certain age. Petprotect, for example, will not insure specified dog breeds over six years old, or any other dog over eight years of age. It's limit for cats is ten years.
Pre-existing conditions.
Routine visits to the vet, such as vaccinations, spaying, castration or nail clipping, unless they are carried out for medical reasons, will not be covered.
Holiday cancellation costs are generally paid out only for one named person and not holiday companions.
Watch out too for age loading. Some insurers will start to charge higher premiums once your pet reaches a certain age.
Sandra Willcocks from London has had her rabbit, Lucian, for just a few weeks. "I was advised to take out insurance by another rabbit owner who said rabbits can get ill quite often. She'd had her rabbit for eight years and said she'd spent hundreds of pounds on her during that time," explains Sandra. "I chose Petplan because it was the only insurer I could find that would cover rabbits." Sandra pays monthly premiums of £4.85 and there is an excess of £40 payable if she makes a claim. "I haven't had to make a claim yet, but there is an excess on the policy, so if I did claim I would have to pay the first bit."
Tara, an eight-week old German Shepherd, was bought by John Murray of Esher in Surrey in 1984. John took out insurance with DBI, as recommend by the kennels. John soon had to make a claim when Tara jumped out of a window chasing a cat and severed a tendon in her leg.
When she was seven, Tara developed arthritis. She had to take anti-inflammatory drugs, which John feels may have caused other problems. "When she was ten she developed Primeta - an infection in her womb. We had to have her spayed and, because of our insurance policy, we were able to pay for special anaesthetic, which helped lessen the risk of heart attack," explains John. When Tara reached 11 she became anaemic. Her blood was starved of oxygen and John had to drive her to Bedfordshire for specialist treatment, a round trip of 120 miles. "We were facing very large vets bills at this stage," explains John. "Having insurance meant that we were able to do the best for Tara and managed to buy her a few years' remission."
Sadly, Tara died when she was 12 years old. John has another German Shepherd called Charley, who he had got from a rescue centre. "We shopped around for insurance when we got Charley and ended up choosing Saga. We looked at benefits, premiums and excesses. Some policies were cheaper, but the excesses were higher," John explains.
Londoners pay the highest premiums, reflecting the cost of London vets' fees. For example, a one-year old cross-breed dog insured with Petprotect would cost £106.92 a year in Bath and £151.71 in London. And pedigree animals will cost more than cross breeds. The same level of cover for a Great Dane in London would cost £338.04. The age of the animal will also affect the premium. For example, a one-year old moggy would cost £112.87 to insure with Petprotect in London, while an eight-year old would cost £153.90. If you want to spread the payments you can usually choose to pay your premiums in monthly instalments, but this can work out to be more expensive. Older people may benefit from discounts given by specialist insurers such as Age Concern and Saga.
The reason premiums are on the increase is insurers have been offering cheap insurance to attract customers, but they say they can no longer afford to do this. The industry has lost a huge amount of money, as competition drove rates down to unsustainable levels, said Nigel Munns, associate at Bacon & Woodrow. The recent premium increases mean that, in 2000, the insurance industry just about broke even. Bacon & Woodrow believes that, in 2001, rates will increase by an average of 10 per cent.
Insurers claim that for every £100 paid in premiums, they have been paying out £120 in claims, and that premiums are below what is sustainable for the industry, says Dominic Burch, spokesman for Direct Line. As a result, the insurance industry has been losing over £1billion a year.
Dominic Burch puts the increase down to three things. First is the type of claim made. These days, drivers are more likely to claim for personal injury, he says. A serious case of whiplash could lead to a large payout, which would impact on premiums.
Nigel Munns agrees. The nation has become litigation conscious and the amounts paid out for injury are much higher than they used to be, he explains.
The second reason is NHS costs. Accident and emergency departments can now claim for cost of treatment from the insurance company. The third reason is uninsured drivers. Official statistics say that one in 20 drivers is uninsured, but recent research carried out by Direct Line and MORI suggests this figure is more like one in ten drivers. The Motor Insurers Bureau (MIB) estimates that insurers pay £400 million a year to meet the cost of accidents involving uninsured drivers. This adds around £30 to the average annual premium. It's a catch-22 situation. As premiums get higher, it becomes even more tempting for some people not to take out insurance, Nigel Munns says.
Another important factor here is your age. Newly qualified drivers, or drivers under 20, are deemed more likely to have accidents than older, more experienced drivers. Anglia Countrywide and Privilege (owned by Direct Line) both specialise in insurance for higher risk or younger drivers.
Adding teenage drivers to a policy can increase your premium. Only do so if it is truly necessary, advises Dominic Burch. You could consider adding a teenager on a temporary basis.
Newly qualified drivers do get the chance to reduced their premiums by taking extra lessons. The ABI runs a government-backed scheme called Pass Plus. Newly qualified drivers can take extra lessons in motorway driving, poor weather driving and night-time driving. In return for the cost of the extra lessons, drivers can get one year's no-claims discount free.
Old age can sometimes work in your favour. The older you get, the cheaper your premiums should become. Specialist insurers such as Age Concern, Saga and RIAS all offer cheaper insurance to the over fifties.
The make and model of your car also determines the premiums you pay. Insurance companies put car models into twenty different groups - the higher the group number the higher the premium. Factors used to calculate group ratings include: the cost of parts and repairing damage; the time it is likely to take to repair the car; the availability of body shells; acceleration and top speed, and security features fitted as standard. Any modifications to cars will add to the premium too, because the replacement value of the car will be higher.
While it is impractical to move house just to get cheaper motor insurance, there are ways of reducing the premium you pay.
If you haven't made a claim on your motor insurance you can build up a no-claims discount (NCD). This can save you up to 65 per cent on your premiums if you have built up a full NCD. Churchill Insurance gives a 35 per cent discount for one-year NCD, increasing each year up to 65 per cent for five years. Direct Line also give 65 per cent discount for five years claim-free driving. Some insurers give you the option to pay a small premium to protect your NCD. For a charge of 12.5 per cent of the premium, Zurich will protect the NCD. This is available only to policyholders with a full NCD with no more than one claim in the past three years.
If you've been driving a company car for several years, or have been a named driver on another car but now want to insure a private car, tell the insurer, as some will offer an introductory NCD of up to 30 per cent.
By reducing the number of drivers on the policy to two, you could save up to 10 per cent. If you can also limit your car to domestic and social use and have a mileage limit on the policy your premiums will be reduced.
You will have to pay an excess - the first part of any claim - of around £100. Some insurers give you the option to volunteer for a higher excess in return for lower premiums. Zurich offers voluntary excesses of £150 and £200. These reduce the premium by £10 and £20 respectively.
Your premiums will be lower if you can keep your car in a garage - Churchill gives a discount of 3 per cent. If this isn't possible, there are a number of security measures you can take to reduce your premiums. Theft of - or from - cars costs insurance companies millions of pounds each year. A high proportion of your premium is used to cover the risk of theft, so anything you can do to reduce the risks should work in your favour. ABI/Thatcham-approved alarms and immobilisers should qualify you for discounts. Churchill give discounts of up to 5 per cent for approved security alarms.
Numerous other discounts are offered by insurers. For example, if you can limit your cover to a number of miles, you may qualify for cheaper premiums. And members of certain professions may qualify for discounts too. The Civil Service Motoring Association (CSMA), for example, offers discounts to its members.
Premiums may be on the up, but the car insurance market is still very competitive. If your insurance is up for renewal you may not get a cheaper quote than last year, explains Suzanne Moore, spokesperson for the Association of British Insurers (ABI). But you may get a cheaper renewal quote if you shop around, she says.
Start with the internet if you have access, she suggests. Many insurance companies now allow you to buy insurance online and because the administration costs are much cheaper, premiums are cheaper too. The AA, for example, offer a discount of 5 per cent if you buy online.
Most major insurers now have an internet quotation service. The Find website has a list of online insurance companies. Online insurance brokers such as Screentrade provide a good starting point and you only need key in your details once to see a range of premiums.
Buying insurance direct from the company over the phone is also one of the cheapest ways to buy as there is no commission to pay. You can use an insurance broker who will have access to a wide range of policies, but this may work out more expensive than buying insurance direct, as the insurer will pay commission to the broker for passing on the business. Direct Line estimates that commission charges can add up to 30 per cent to the cost of a policy.
Direct insurers tend to be competitive, says Mike Naylor, senior researcher at the Consumers Association. We advise getting several quotes before you buy. What you may have to pay in premium increases, you could probably save by shopping around. He suggests taking a quote or renewal notice to another insurer to see if they'll beat it. He also advises trying brokers. Brokers sometimes have special deals that might suit your particular risk, he says. Local brokers can be found listed in the Yellow Pages.
Egg, the online financial services institution, started offering motor insurance last summer and it guarantees to beat your current renewal price. If the quote we give to customers is higher than their current renewal notice, they will need to send us their renewal notice and then we will refund the difference plus £1, says Phil Ashkuri, spokesperson for Egg.
Classic car owners should seek advice from their car-owner club. Most classic clubs organise special deals with insurance companies and can offer discounts. There's a staggering difference between the highest and lowest premiums. For the young driver with NCD, the highest premium quoted was £1,031 from Royal & Sun Alliance (£2,902.88 without NCD) and the cheapest with NCD was Direct Line at £366.45 and Churchill £382.20. Churchill and Direct Line tended to be the cheapest in all cases and even offered the cheapest quotes for the older driver. Direct Line quoted £126 with full NCD, Churchill quoted £137.55, while Age Concern quoted £164.33 and Saga £232.33.
But don't go on price alone when choosing your policy. Make sure that the cover provided is adequate and suits your needs and that the limits paid out for audio equipment, for example, are high enough to cover your car stereo.
Improving the security of your car may lead to discounts.
Make sure you know what limits apply to the policy before you take it out. For example, cover for radio replacement may be limited.
Consider changing your car for a smaller one if insurance is prohibitively high
A good policy should include a 24-hour helpline, free courtesy car and third-party cover while motoring abroad.
Make sure the policy includes cover for personal injury. This could prove invaluable if you are injured in an accident - or if someone sues you for injuring them.
It is illegal to drive in the UK without insurance and the minimum type of cover you can take out is third-party. This covers:
The next step up is third-party fire and theft. This provides the above cover plus:
When you are shopping for motor insurance, to avoid the frustration of ringing back, make sure you have several bits of information to hand:
You may see very little
risk in providing your particular Internet Service, and feel that your
procedures are perfectly adequate, however suppose an allegation is
placed against your company (maybe unfounded) the costs to defend
this is going to be high. Professional Indemnity Insurance cover, U.K.
is going to protect your company against such a claim, and in the
worst case scenario pay for the damages to the third party if you
lose!!!
A complex and once expensive area of contractor finance, many contractors are now looking at the various insurance policies which are available to protect you in the event of an accident at work, or claims against you for negligence. We have created this section with as little jargon as possible to make this important subject as accessible as possible. This section was created as a result of feedback from our regular visitors. You should speak to a professional Insurance Broker for individual advice.
This insurance is arranged to protect employers against claims for injury or illness brought by employees. Employers' Liability (Compulsory Insurance) Act 1998 requires that employers maintain cover to a minimum of £5,000,000 in respect of such claims. Many contractors don't take out this type of policy (since they will be claiming against their own Limited Companies!) - but it is a statutory requirement all the same. All insurers provide £10m cover as a matter of course.
Protects you in the event of an investigation by the tax authorites - more and more contractors are investing in this type of policy in light of IR35 and the complications it may bring from 2001 onwards. Would typically include protection against VAT disputes with HM Customs & Excise and employer compliance investigations (PAYE,NIC,P11D). This type of cover should not cost too much, although some financial advisors resell packages at a premium, so it's best to shop around.
Since more and more contractors are working from home, these types of policies are intended to cover the loss or damage to equipment, premises, documents in the event of theft, accidental damage or any other unforseen circumstances.
Policies of this type are far less expensive than you may think, although the final cost will depend on your individual circumstances. The cost of individual polices tend to depend on the following factors:
Whether the contractor works through an agency, or direct with the client. Rates for contractors working through agencies tend to be lower, but not in all cases.
Should you wish to take out Public and Employers Liability insurance, this should be claimed as part of the IR35 '5% general allowance'.
Professional Indemnity insurance, on the other hand, can be claimed as a 'Schedule E' expense - in addition to the 5% allowance, so this will be an attractive scheme for many. Professional Indemnity insurance is the most popular scheme for contractors.
Income payment protection is designed to help you in case something happens that might affect your life and commitments. Simply consider the following information:
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