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Self Insurance

Self Insurance

Self insuring your pet means that instead of paying monthly premiums to a pet insurance company, you save those same premiums in a bank account of your own and build up a reserve of funds to just pay veterinary expenses yourself, as and when they arise.

Why Do This?

It may be stating the obvious here, but pet insurance companies are not charities. They are in business to make an honest profit (nothing wrong with that of course) and the only way they can do that is by charging people more in premiums than they expect to pay out in claims.

So bearing this in mind, it's an undeniable fact that the AVERAGE customer will pay out more in premiums than they will claim in expenses. That same "average customer" would therefore have been better off by saving the premiums and just paying the bills themselves.

The Risks of Self Insuring

The risk, of course, is that in the real world there is no such thing as an "average customer". Some pets will be lucky and have very healthy lives, while others will be less fortunate and incur large vet bills, due to serious illness or accidents.

If you choose to self insure, you are effectively taking a gamble that your pets health will be average or better. If it is, then you will almost certainly save money compared to paying monthly insurance premiums. However, if your pet has below average health, you will face substantial bills that you may be unable to pay.

The Benefits of Self Insuring

Aside from the main benefit of potentially saving money (assuming your pet has average or better health), there are other benefits to self insurance.

  • Your pet will be covered for things that any normal policy would exclude, such as pre-existing or hereditary conditions.
  • You can use your own discretion regarding the choice of veterinarian and treatment options, without having to seek prior approval from an insurance company.
  • If your pet is fortunate enough to be very healthy and require little treatment during their lifetime, the "premiums" you have saved up will be yours to spend as you wish.

Dedicated Savings Account

If you are going to take the self insurance route, it is strongly advisable to be very disciplined about it. Set up a dedicated savings account, specifically for this purpose, and pay a fixed amount into it each month. Under no circumstances should you withdraw funds for any purpose other than your pets healthcare.

It's not strictly necessary to do this of course, but most people don't have the luxury of surplus cash swimming around in their normal bank account - so putting your pet insurance savings in a dedicated account helps to psychologically "ring fence it", otherwise it is all too easy to spend the cash on those day to day expenses.

Is Self Insurance Right For You?

Self insurance is probably best suited to those people who are financially well organised. It takes a good degree of will power to save up cash and resist the temptation to dip into it. It also helps if you have a fair amount of savings, because you might face a large bill early on in your pets life, before you've had time to build up a savings pot in your dedicated account.

Insurance helps to even out the expense of pet healthcare into a manageable amount each month, instead of one huge bill when your pet is ill. For many people it is worth paying a bit more in overall total premiums, if it helps you to budget your finances properly.