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Pet insurance: Family priorities revealed as coverage crisis looms

Every so often, there is a news story about a wealthy woman who has left her multimillion dollar mansion to her cat. Or, there's some guy working out a divorce who insists that he needs $15,000 a week to let his dogs live in the style to which they've become accustomed. At times those stories will include little snippets about insurance, too.

In at least one country, parents are more likely to insure their pets than their children. A recent survey showed that 12 percent of consumers in England have critical illness coverage for their pets. Only 9 percent have the coverage for their children.

Researchers say that cost is the main deciding factor. Respondents said they would happily pay for insurance for themselves and their children if the monthly payments were reasonable.

News outlets are reporting that 50,000 pet owners will not have to make that choice anymore. The company that insures their pets will no longer offer the coverage; the insurer says it is just too expensive. Sadly, the insurer is not alone in its decision. In the last two years, 13 insurance companies have stopped offering pet policies. All point to rising veterinarian fees as their reason.

In the past year, the average vet bill for a cat has increased 28 percent. For dogs, costs have gone up 13 percent. Insurance policies have gone up more than 33 percent in the same period, and insurers say that still isn't enough to sustain the pet insurance line.

The company is not terminating coverage all at once. First, it will not sell coverage anymore. Second, current policyholders cannot renew their coverage, and, finally, all coverage will terminate in September.

With the insurance market shrinking, pet owners may have to make some difficult choices. Insurers are unlikely to cover animals that have histories of illness or chronic conditions.

Sources:

Business Insurance, "Critical illness insurance covers more pets than kids in U.K." Feb. 2, 2012

Daily Mail (UK), "50,000 pet owners face crippling vet bills after their insurance is axed," Ruth Lythe, Feb. 4, 2012

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