Pet Dog Insurance -
When They Change Your Policy... A Real Life Story
Here is a real life story of how our pet dog insurance worked… and didn't work for us. It was for our Great Pyrenees Mountain Dog, Gus.
Shortly after we brought Gus into our lives we decided to get pet insurance. We were not looking for the cheapest pet insurance, but for affordable pet insurance that provided what we believed to be ample coverage for a reasonable price that we could afford. That's what affordable pet insurance meant to us.
Our pet insurance provided coverage for Illness and for Accidents. For illness we had a $5,000 limit per illness per year. For Accidents, we had a $5,000 limit per incident per year. Our co-insurance rate was 80%, meaning that we had to pay for 20% of each claim.
Our pet insurance policy stated that they would never raise our Premium as a result of paying claims. We liked that. Finally, we had a $100 deductible for each accident incident. We also had an annual deductible for illness claims. The illness deductible started at $100 and then would increase to $500 as Gus aged.
Of course there was the usual list of Limits and Limitations and Exclusions. Our premium was approximately $55 plus tax per month, so this wasn't the cheapest pet insurance by any means. Gus was less than a year old when we insured him.
So far this sounds reasonable, doesn't it? We certainly thought so. But there were a few surprises along the way that changed everything. What was affordable pet insurance at the start suddenly became very unaffordable.
In the first year we filed no claims at all. Our Premiums for the year were approximately $745 including taxes.
In year 2 we submitted $525.40 in claims and everything went well.
Sure it cost us more with the insurance than if we did not have any, but we wanted to be insured for BIG emergencies.
Then in year 3, Gus sustained a serious ACL problem that resulted in TPLO surgery. It was a big emergency. Our claim almost reached the maximum of $5,000. In fact it was $4,665.05. Again our pet dog insurance paid as we expected.
Then we received the letter that told us our co-insurance was being reduced to 50% due to our large claim, and would be reviewed sometime in the future before it would be restored to the original 80%.
We had paid premiums for coverage up to $5,000 so we were surprised to be penalized for using what we had paid for. After all, the insurance company had set the deductible and the co-insurance and the maximum they would pay for claims. So it was quite reasonable for us to assume that the premium was set to account for those limits. It was not! That is when we discovered how serious the "claims risk management" clause was in our pet dog insurance policy. Although they promised not to change our premiums, they certainly did change the co-insurance percentage.
We continued to pay for a number of months, but our insurance company would not tell us clearly when our original co-insurance would be restored. With such reduced benefits and uncertain future from our pet dog insurance, we decided to cancel our policy, which we did in March of the fifth year.
The table below shows how our pet dog insurance policy performed. The Claims in Years 1 through 4 are our actual numbers. Years 5 through 11 are our estimate of what might have happened if we had not canceled our policy. All of the deductibles are actual amounts, based on Gus' age and are set out in the terms of our pet dog insurance policy. We assumed $750 per year in claims since we would have paid that amount in premiums anyway.
In the table you can see for each year's claims, the amount of the claim paid by the Insurance Company and the amount paid by us. The "Total Cost With Insurance" is the amount of the claims paid by us plus our "Annual Premium With Tax".
The "Total Cost With No Insurance" is the amount we would have paid if we had no insurance.
The "Insurer's Annual Underwriting Profit/Loss" shows the difference between the amount collected in premiums and the amount spent in Claims plus an Administration cost of 15%.
The last column shows the accumulation of the profit or loss over the years. Losses are shown in Red.
As you can see, the first 2 years were profitable for the insurance company. Then in March of the third year we had the big TPLO claim. Within months we received the letter reducing the co-insurance percentage to 50%.
The Table above shows what happens when co-insurance is reduced and Deductible amounts increase. Starting at Year 4, look at the portion the Insurance Company paid and what we paid. No doubt our Insurance Company wanted to recover the underwriting loss from Year 3. Since our Insurance Company didn't provide any clear answers, we concluded that it would continue with reduced co-insurance until it did recover its losses.
We also concluded that it would be better for us to cancel the policy and save the premium in the bank. Because our pet dog insurance now provided so little coverage, if we had not canceled it, we would not have been able to afford to pay for Gus' care in addition to the insurance premiums. So our pet insurance company, was no longer providing what we needed.
Is there a better option? Is there another company that can provide the best pet health insurance? Let's see.
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