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Premium Not the Sole Consideration Factor for Pet Insurance Choose with Care as Coverage Definition and Compensation Terms Vary

  • 2023.03.15

Many people treat pets as their own children and want them to be healthy. If they fall ill, however, their medical costs could be astronomical and might pose a financial burden to pet owners. As such, many pet insurance products have emerged on the market in recent years, providing a variety of medical, hospitalisation, and other items of coverage. The Consumer Council surveyed 23 pet insurance plans available and found that if owners were to consider the premium alone, variations in coverage, definitions, and compensation terms could lead to considerable differences in actual payout. Even for the same breed and age, premiums could vary by as much as over $12,000 among different insurance providers. Moreover, nearly 80% of the plans only accepted new applications for pets up to 8 years old, and even if policy renewal was allowed, coverage items and premiums might change. The Council reminds consumers to compare plans extensively, in terms of coverage and compensation terms instead of considering premiums alone, and assess actual needs before deciding whether to purchase insurance for their pets and what plans to select.

The Council enquired with 7 insurance companies for information on pet insurance plans in January this year, and 6 replied. For the 1 company that did not provide information, Council staff obtained information of the relevant plans online for comparison. Council staff also simulated taking out insurance policies online for dogs and cats of different ages and breeds to compare variations in premiums.

Mainly Cats and Dogs Are Covered and Be Mindful of Age Limits

Currently, local insurance companies generally only offer policies for dogs and cats. There is basically no restriction on the breed of cats that can be insured, but for dogs, most insurance companies would exclude certain dangerous dogs or their mixed breeds, such as Dogo Argentino, Fila Braziliero, Japanese Tosa, Pit Bull Terrier, and Tibetan Mastiff, etc.

Among the 23 plans, 18 had a maximum enrolment age of 8, while the remaining 5 plans accepted new applications for pets up to 11 or 12 years old. Generally speaking, as pets get older, the premium increases accordingly.

Premiums Could Vary by Over $12,000 for the Same Age and Breed

Many pet owners regard the premium as their main consideration when buying insurance. However, according to the Council’s comparison through simulated online purchase and/or information on premiums as listed in insurance companies’ brochures, not only could premiums vary substantially among different plans, but also other terms, such as deductibles, claim methods, benefit limit and coverage, and waiting periods, etc. Therefore, it is better for pet owners to compare different plans before making a decision. The simulated comparison covered 6 dog and cat breeds that are more commonly seen in Hong Kong, including Poodle, Shiba Inu, Alaskan Malamute, British Shorthair, Domestic Short Hair, and Ragdoll at ages 1, 5 and 8 respectively, and selected plans with the highest coverage and payout. It was found that even for the same age and breed, premiums could vary from a minimum of approximately $3,500 to a maximum of over $12,000. The survey also found that, the largest discrepancy in premium fell on an 8-year-old Alaskan Malamute, with the highest being $17,352 and the lowest being $4,798, a difference of over 2.6 times. However, no significant difference in premiums was found among cat breeds while there were some differences in premiums for cats of different ages. The largest discrepancy was that for an 8-year-old cat, with the highest premium being $8,741 and the lowest being $2,827, an approximately twofold difference.

Consumers Should Heed Differences in Definition of Items as Coverage Varied 

Although all the surveyed pet insurance plans provided medical coverage, consumers should note the discrepancies in definitions of coverage scope and items under different plans. For example, over 20% (5 plans) only covered veterinary consultations and prescribed drugs, while surgical-related or hospitalisation expenses were not covered, thus the premiums were relatively lower. Another example is that some plans covered the use of prosthesis under “clinical and surgical expenses”, while others excluded such costs. In addition, most plans covered the cost of hospitalisation of no fewer than 12 consecutive hours, but some plans only covered the cost of “overnight” hospitalisation, which means the stay must be beyond 12:00 midnight. In addition to medical coverage, nearly 90% (20 plans) covered third party liability, with the coverage ranging from a minimum of $300,000 to a maximum of $3,000,000. Besides, 30% (7 plans) provided overseas coverage. If pet owners prefer taking their dogs or cats on overseas vacations, or if their pets enjoy interacting with other animals or people, it is important to check whether the policy includes relevant coverage.

Actual Payout Affected by Compensation Terms and Methods

Across the various plans, the actual payout to policyholders under each plan was primarily affected by compensation methods, including the plan’s deductible ratio and whether there were sub-limits or only a total annual maximum payout.

Similar to individual health insurance policies, most pet insurance policies have deductibles, which is the amount or percentage to be borne by the policyholder when filing a claim. Depending on the maximum payout amount of each policy and its sub-limits, consumers might end up paying more than the deductible amount. Except for 3 of the surveyed plans, medical coverage of all the remaining plans had quite diverse deductible ratios, ranging from 10% to 50%. Half (10 plans) of them used a fixed percentage to calculate deductibles. 15% (3 plans) increased the deductibles in phases according to the actual age of the pet, with higher deductibles for older pets. 20% (4 plans) used the pet’s age at enrolment to calculate deductibles, the younger the pet’s age at enrolment, the lower the deductibles. 15% (3 plans) of the plans’ deductibles were dependent on whether the insured pet received treatment at “network clinics”, 10% deductibles applied if so, or 30% for “any other registered vets not on the list”. The Council reminds pet owners to check if the clinic is on the list before visiting with their pets, understand how deductibles are calculated for different plans, and contact their insurance providers if necessary to avoid over budgeting due to a heavier liability than expected when they make a claim.

On the other hand, the surveyed plans had either a sub-limit structure, which set a maximum payout for each covered item, or a total annual maximum, where theoretically all expenses after deductibles could be reimbursed as long as the total medical expenses did not exceed the annual maximum. Despite plans without sub-limits being relatively more flexible, premiums might also be higher. Assuming 2 insurance policies were taken out for a 4-year-old pet, both with the same annual maximum payout of $60,000 on medical coverage, generally similar coverage on other items, and both with a 20% deductible, the premium for the plan with only a total annual maximum payout without sub-limits would cost $2,963 more, a 70% difference from the other plan.

Watch Out for Exclusions and Renewal Terms

Before taking out a policy, consumers should understand all exclusions, such as pre-existing conditions or symptoms, neutering surgeries, treatment of congenital conditions, etc. Even if an insurance plan claims to offer “guaranteed renewal”, “provide lifetime protection” or have “no limitation on the age of the insured pet at policy renewal”, it does not mean that the coverage will remain unchanged upon renewal. Consumers are advised to make extensive enquiries and comparisons before making a decision. Some reminders on purchasing pet insurance:

  • A pet’s age has a significant impact on the eligibility, premium, renewal and claims. Consumers should carefully consider the suitable time to insure their pets;
  • While the premium is related to the scope of coverage, other factors such as deductibles and how they are calculated, coverage limit, and major exclusions should also be studied;
  • Recognise that “medical coverage” does not mean that the insurance company will cover all medical-related expenses. Read relevant documentation carefully to thoroughly understand the coverage, limitations, as well as exclusions. Contact the insurance companies for enquiries;
  • Beware that “guaranteed renewal” plans also have limitations, e.g. the insurance company might revise or amend policy content and premium before renewal.


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