Is Self-insurance A Viable Alternative For Pet Owners?

It is a simple fact that most cats and dogs will require unexpected and potentially costly veterinary treatments at some point in their lifetimes, and many pet owners struggle with funding costly veterinary care and treatment. Pet insurance is a great way of covering the cost of potentially expensive veterinary treatments, but insurance is also a form of reverse gambling, where you ultimately hope that a big payout will not be needed- but still have to keep funnelling money into funding your cover even if your pet never gets sick. Over the duration of a pet’s lifetime, many owners of insured pets find that the overall payout value that they receive from their insurance company far exceeds the value of their paid policies, and so have ‘won’ this particular gamble. However, a significant number of pet owners may find that the opposite is true for them. They might spend many years paying policies, only to find that they never need to make a claim against their payments, or that when they do need to make a claim, their insurance policy does not cover the full cost or that their policy dos not provide coverage for that particular condition. This sums up exactly why taking out pet insurance is a gamble: There are winners and losers, but this is a serious game when the ultimate jackpot is your pet’s health. For many pet owners, the risk: cost benefits of pet insurance simply do not add up for them, and they might seek alternative means of making sure their pet is covered in the event of an accident or incident that requires treatment. This is where self-insurance, a modern name for what is essentially an age-old phenomenon, comes into its own.

What is self-insurance?

In its simplest terms, self-insurance means that the pet owner themselves provide their own insurance against the future cost of veterinary treatments. Self-insurance means not paying out a monthly policy to a third party for which they might potentially never receive any benefits; but it also means that no third party is there to provide a safety net for their pet’s treatment if needed. Instead, people who ‘self-insure’ set by a contingency fund that they pay into on a regular basis, building up a pot of money to be used in the case of an emergency or if veterinary treatment is unexpectedly needed. Basically, it is a savings scheme, specifically earmarked for the future care of their pet’s needs. How self-insurance works in reality is very much down to the individual; be it a case of keeping money in a piggy bank, setting up a designated savings account with a financial institution that pays interest on their savings, or even arranging with their veterinary surgery to pay credit into their pet’s account for future usage. So, is self-insurance a good idea, or not? Again, this very much depends on the person and pet involved, and his or her own unique circumstances. If you are trying to decide if self-insurance is a viable alternative to traditional insurance for you and your pet, consider some of these pros and cons.

Pros of self-insurance

  • Self-insurance provides cover for uninsured or uninsurable conditions, such as hereditary defects, pre-existing conditions and dental treatments.
  • You can use your self-insurance for anything that you choose; you do not need to get an insurance company’s approval before seeking treatment.
  • If you end up not needing to use your contingency fund because your pet is never or only vary rarely sick, you have not lost any money and will get the entire amount of your money back, potentially with interest.
  • Older pets, working pets and uninsurable pets can all be protected without exception.

Cons of self-insurance

  • If your pet’s veterinary treatment comes to more than the amount of the money you have saved, or treatment is needed when you’ve only just begun saving, you will have no one to turn to and may be no better off than if you were uninsured.
  • You will have no third-party coverage if your pet causes damage or injury to another person or property.
  • You have to be extremely good at managing your money, paying into your fund regularly, and able to keep your pet’s self-insurance fund separate from any other monies you may have; dipping into it now and then for other non-pet related costs can soon deplete your funds.
  • Protracted inpatient stays, road traffic accidents and many other veterinary treatments can soon run into costs of many thousands of pounds; have you really considered the potential cost of your pet’s future veterinary treatment, and can you build up a contingency fund that will cover it, or were you expecting a couple of hundred pounds to be sufficient?

The ultimate decision as to whether or not self-insurance is a viable choice for you is, as mentioned, purely a case for the individual to decide. If you are considering cancelling an existing pet insurance policy in favour of self-insurance, it can be a good idea to wait for a year or more until you have built up sufficient funds to cover your pet if you need to pay for treatment yourself, or to keep a contingency fund alongside of traditional insurance coverage. For many pet owners, a combination of traditional insurance coverage and self-insurance, or a contingency fund, is the perfect solution- it does not have to be either/or after all, so don’t rule it out!


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