What is pet insurance?

Pet insurance is health insurance for pets and is often bundled with liability cover, which safeguards you if your dog attacks someone or causes a road accident. According to the Pet Health Council, one pet in two needs veterinary care each year, but only 15 per cent of pets are insured. Research from Sainsbury's Finance indicates that 1.6 million people have had to put down a cat or dog in the past five years because they have been unable to afford treatment.

What animals can be covered?

Most providers offer policies for dogs and cats only. Some cover other popular pets, such as rabbits, while specialists can offer cover for reptiles and exotic birds.

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BACKGROUND

• How to choose travel insurance

• The beginner's guide to life insurance

• Payment protection insurance explained

• The beginner's guide to private health insurance

• Pet insurance explained

How much does it cost?

Policies start at about £60 a year for a cat. The price hinges on many factors, including where you live, animal breed and age. Insurers may also offer two or more levels of cover.

Is it worth it?

Many pet owners think it is because it provides peace of mind. However, note that cheaper policies offer limited protection.

How can I compare deals?

Comparison websites, including Moneysupermarket.com, allow you to compare prices, but not across the whole market. The RSPCA and PDSA both offer cover, with 20 per cent of premiums supporting the work of the charities.

What should I watch out for?

Check levels of cover carefully because the small print can conceal huge gaps in protection. For example, some deals cover only 12 months of treatment per condition, while others are lifelong. Either way, payouts are always capped, so one insurer may reimburse up to £1,000 of general veterinary bills, while another may stretch to £7,000. A third factor is the insurance excess. Policyholders must pay a certain amount towards each claim. This varies across insurers and policies and may be a fixed sum or a percentage of the claim.

Bear in mind that pet policies will not pay out for pre-existing conditions or those that occur within the first few days of cover. Also not covered are the (significant) costs of routine care, such as vaccinations, boosters and worming.

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Five websites

Pet Health Council

RSPCA

PDSA

The Blue Cross

Money made clear