Should you buy pet insurance or “self insure” your pet?
Veterinary costs are soaring, but many pet insurance policies provide a poor level of cover, says Ruth Jackson-Kirby.


Owning a pet is an expensive business. The price of vet and other pet services rose by 17% between 2015 and 2020, according to the Daily Mail. One of the largest possible outgoings is medical treatment – advances in veterinary science mean a whole host of illnesses that would have resulted in a pet being put down years ago can now be treated, at a cost.
This has led more of us to insure our pets so that we don’t have to find the money to pay vets’ bills ourselves. But pet insurance isn’t cheap and premiums are rising far faster than inflation. So deciding whether it’s best to take out a policy or “self-insure” by putting aside money for possible expenses isn’t straightforward.
Beware the small print
The principle of pet insurance, as with most insurance, is that you pay regular premiums and your pet’s medical expenses will be covered if they become ill or injured. The fundamental problem is that policies are often riddled with limitations and exclusions. Most put a limit on how much they will pay out per illness or injury, so even if you’ve paid a small fortune in premiums, you could still find yourself footing the bill for veterinary treatment after a certain time period or cost limit.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
You also have to pay an excess every time you claim. This has steadily increased over the years, so you can expect to pay the first £100 or £125 of every claim. On top of the excess, once your pet is deemed to be old – a mere eight years old for dogs and cats with many insurance firms – you also have to pay a proportion of each claim. This can mean you are paying as much as 20% of the claim plus the excess.
Finally, once you’ve made a claim for an ongoing condition you can’t switch insurer as existing conditions are nearly always excluded from new policies. That can leave you trapped with your current provider, paying steadily rising premiums.
All these limitations make the fact that premiums have risen by double the rate of inflation even more irksome. The average annual pet insurance premium is £271, according to the Association of British Insurers. This rises as your pet ages, to a whopping £888 for an 11-year-old dog, according to NimbleFins, a personal-finance research and analysis website.
The cost of self-insurance
You can avoid those huge premiums if you self-insure. This may well be the best option on average, but don’t underestimate how much you could have to pay if you are unlucky enough to have a seriously sick or injured pet. Make sure that you are in a position where you can pay a large bill in an emergency. The average claim is now for £800 and some injuries can be far more expensive. A dog’s dislocated kneecap can cost around £4,000.
You’d need to set aside £80 a month for four years to amass a £4,000 reserve against emergencies, and one accident could empty your account. However, if you never need to dip into your emergency account, after 15 years you could have £15,500. Even if you only saved the average monthly premium of £22.50, you would have £4,370.
If you take out insurance, look for the best deal, taking account of all limitations, not just price. Compare the pay-out limits to get as much cover as possible and get a lifetime policy. These will pay out up to a set amount each year. That amount resets after 12 months, so you should never hit a point where you are paying all the vet’s bills despite having insurance.
Ruth Jackson-Kirby is a freelance personal finance journalist with 17 years’ experience, writing about everything from savings and credit cards to pensions, property and pet insurance.
Ruth started her career at MoneyWeek after graduating with an MA from the University of St Andrews, and she continues to contribute regular articles to our personal finance section. After leaving MoneyWeek she went on to become deputy editor of Moneywise before becoming a freelance journalist.
Ruth writes regularly for national publications including The Sunday Times, The Times, The Mail on Sunday and Good Housekeeping among many other titles both online and offline.
-
10 vinyl records worth up to £10,000 - is one in your collection?
News Vinyl is experiencing a resurgence and collectors will pay up to £10,000 for some albums - is it time to dust off your old records?
By Marc Shoffman Published
-
FCA: Banks are still short-changing savers
The latest FCA review finds that while public shaming has encouraged providers into offering better deals on savings, many of those with closed accounts are still being shortchanged.
By John Fitzsimons Published
-
Lock in high yields on savings, before they disappear
As interest rates peak, time to lock in high yields on your savings, while they are still available.
By Ruth Jackson-Kirby Published
-
How to cut the cost of home insurance
Home insurance policies are becoming increasingly expensive, but there are several ways you can keep costs down.
By Ruth Jackson-Kirby Published
-
Are lifestyle funds still fit for purpose?
Lifestyle funds have failed to do what they were supposed to do – shield savers from risk in the run-up to retirement.
By David Prosser Published
-
NatWest-owned Ulster bank boosts easy access savings rate to 5.2%
Rates on easy access savings accounts have hit over 5%, with Ulster Bank now giving savers the chance to earn 5.2% on their cash savings. We have all the details.
By Marc Shoffman Published
-
Moneybox raises market-leading cash ISA to 5%
Savings and investing app MoneyBox has boosted the rate on its cash ISA again, hiking it from 4.75% to 5% making it one of top rates. We have all the details.
By Ruth Emery Published
-
October NS&I Premium Bonds winners - check now to see what you won
NS&I Premium Bonds holders can check now to see if they have won a prize this month. We explain how to check your premium bonds
By Kalpana Fitzpatrick Published
-
October’s NS&I Premium Bond winners revealed - have you scooped £1 million?
Two lucky NS&I Premium Bond winners are now millionaires this October. Find out here you are one of them
By Kalpana Fitzpatrick Published
-
The best packaged bank accounts
Advice Packaged bank accounts can offer great value with useful additional perks – but get it wrong and you could be out of pocket
By Tom Higgins Published