What Is Excess In Pet Insurance?
As a pet owner, you may find yourself worried about the cost of veterinary care if your pet were to fall ill or get injured. The bills can add up quickly, causing financial strain and emotional stress.
One potential solution is pet insurance, but it comes with its own set of complexities. Among these is the concept of ‘excess’, a term you’ll frequently encounter in pet insurance policies. Without a clear understanding of what excess means, you could end up with unexpected out-of-pocket expenses or a policy that doesn’t quite meet your needs. Each company or policy can have a different approach to excesses, and its important to know the difference.
In this article, we aim to demystify the concept of excess in pet insurance, discuss different types of excess, and offer guidance on choosing the right level of excess for your circumstances.
By the end of this article, you’ll have a firm grasp on excess and be better equipped to navigate the world of pet insurance, ensuring your pet has the coverage they need without causing you undue financial stress.
Understanding the Excess in Pet Insurance
What is Excess in Pet Insurance?
Simply put, excess is a specified amount of money that you, the policyholder, are required to pay towards a claim before your insurance policy starts to pay out. It is, in essence, a portion of the veterinary bill that you agree to cover out of pocket.
In Australia most providers typically have a Per Claim excess, Per Condition Excess or Annual Excess. Pet Circle Insurance has an Annual Excess, we have examples below on what this means for your wallet.
Once you’ve paid your excess, your pet insurance policy will then kick in to cover the rest of the eligible veterinary expenses up to your policy limit.
The Importance of Excess in Managing Your Pet Insurance Costs
Excess plays a crucial role in managing the overall costs of your pet insurance. By agreeing to pay an excess, you can significantly reduce your monthly or annual insurance premium.
The more excess you agree to pay, the lower your premium will be. However, it’s essential to find a balance. Opting for a high excess may reduce your premiums, but it could also lead to high out-of-pocket costs should you need to make a claim. Traditionally opting to have no excess has the highest monthly payments, choosing to have the smallest excess option (like $75) can have big impacts on your monthly premium.
Your choice of excess should be informed by considerations about your financial circumstances, the health of your pet, and the likelihood that you’ll need to make a claim.
If your pet is young, healthy, and less likely to require significant veterinary intervention, a higher excess (and thus lower premium) may be a viable option. If, however, your pet is older or has a pre-existing condition, a lower excess may be more beneficial, despite the higher premiums.
Real-World Examples of How Excess Works
To illustrate the concept of excess, let’s consider a simple scenario:
A Dog has a skin condition that requires two vet visits, one in January and one in February, each visit costs $500. In October the Dog hurts its leg, an accident that requires a vet of $1000.
You have chosen to have a $100 excess, lets look at how each year plays out in the following made up policy:
- Per Claim Excess: Per claim means that for the 3 claims you will be responsible for paying the first $100 (the excess) for each of the 3 vet visits . Your insurance will then cover the remaining $400 for the January visit, $400 for the February visit and $900 for the October accident.
Out of pocket: $300
Paid by the insurer: $1700
- Per Condition Excess: Per condition means that for the 3 claims, you will only be responsible for paying the first $100 (the excess) on 2 of the claims; for the first visit on the skin condition and the leg accident. Your insurance will then cover the remaining $400 for the January visit, $500 (full amount) for the February visit and $900 for the October accident.
Out of pocket: $200
Paid by the insurer: $1800
- Per Year Excess: Per condition means that for the 3 claims, you will be responsible for paying the first $100 (the excess) on the first claim. Your insurance will then cover the remaining $400 for the January visit, $500 (full amount) for the February visit and $1000 (full amount) for the October accident.
Out of pocket: $100
Paid by the insurer: $1900
Pet Circle Insurance offers a Per Year Excess.
Remember, these are simplified examples, your Annual limit, how much you have claimed each year, pre-existing conditions and your personal coverage can significantly change the examples above. Always ensure you thoroughly read and understand your pet insurance policy, as terms and conditions can vary significantly between providers.
Choosing Your Excess in Pet Insurance
Factors to Consider When Choosing Your Excess
When choosing your excess in a pet insurance policy, several factors should be taken into account to ensure it’s a good fit for your circumstances. Firstly, assess your financial situation and determine how much you could afford to pay out of pocket in the event of a claim. Choosing a higher excess may reduce your premium, but you should be sure you could comfortably cover this amount if needed.
Consider the age, breed, and health status of your pet. Younger, healthier pets typically have lower risk and may warrant a higher excess for a lower premium. On the other hand, older pets or breeds prone to specific health conditions might be better suited to a lower excess, despite the higher premiums.
Also, think about your pet’s lifestyle. Does your pet spend a lot of time outdoors where they could be more prone to injuries? Are they prone to eating things they shouldn’t, leading to potential foreign body obstructions? If your pet is more adventurous or has a history of needing veterinary intervention, a lower excess might make more sense.
Some Insurers, Like Pet Circle Insurance, Allow Flexibility in Choosing the Excess
Some insurers offer flexibility in choosing the excess, Pet Circle Insurance has an Annual Excess that varies from $0, $75, $150 – allowing personalisation.
This flexibility allows you to adjust your excess as your financial situation or your pet’s health status changes. For instance, if your pet is diagnosed with a chronic condition like diabetes or arthritis, you may opt for a lower excess to ensure affordable care.
Balancing Excess with Premium Costs: Pros and Cons of Higher and Lower Excess
Striking the right balance between excess and premium costs is crucial. Choosing a higher excess reduces your premium, making your insurance more affordable in the short term. This can be beneficial if your pet is healthy and unlikely to require significant veterinary care.
However, the downside of a higher excess is the larger upfront payment if your pet does require treatment. If your pet develops a chronic condition or needs emergency surgery, you’ll need to pay your high excess before your insurance coverage applies, which could place a significant financial burden on you.
Conversely, a lower excess results in higher premiums, but can provide peace of mind knowing that if you need to make a claim, your out-of-pocket expenses will be lower. If your pet is prone to illness or injury, or as they age and become more susceptible to certain conditions, a lower excess may be more cost-effective in the long run.
The key is to consider all these factors and choose an excess and premium combination that offers the right balance for your unique circumstances.