Part 1 of 3 in our series on how Knose thinks about pet insurance pricing
When you bring a pet into your life, you sign up for two kinds of costs. The first kind is predictable — food, grooming, the occasional toy, annual health checks, vaccinations and parasite prevention. You can budget for these. The second kind is less predictable — injuries, illnesses and emergencies that arrive without warning and without regard for your bank balance.
Your pet might be one of the lucky ones who sails through life without a major health scare. Or your pet might be one of the unlucky ones who tears a cruciate ligament, tangles with a snake, or develops a chronic condition that requires ongoing treatment.
The costs in that unlucky scenario can run into tens of thousands of dollars. Most pets land somewhere in the middle, but even “average” vet costs have a way of arriving at the worst possible time.
So how does pet insurance pricing actually work?
It pools all of that uncertainty for the insured pets together. Instead of each pet owner facing the full spectrum of possible outcomes alone — from nothing at all to financially devastating — pet insurance spreads the risk across a large group of pet owners.
So your experience as an insured pet owner could look much more like the average, rather than a roll of the dice without insurance.
Here’s where we want to be upfront with you. The average lifetime cost for insuring a pet is likely to be somewhat higher than the average lifetime cost for a pet that is uninsured.
That’s partly because there are real costs involved in running an insurance company — administering claims, meeting regulatory requirements needed to operate in a highly regulated industry, and providing a return on the capital to shareholders. Those costs have to come from somewhere.
But, with your pet insured, what you get in return is more predictability. You swap the risk of being caught on the wrong side of the “bell curve” for a more manageable cost. Your savings won’t be wiped out by an emergency surgery.
And then there’s the reality that roughly one in four uninsured pet owners face. When something serious happens and the money simply isn’t there — and credit isn’t available either — the choices become heartbreaking.
Every year, pet owners are forced into decisions about their pet’s care that no one should have to make purely because of finances. Pet insurance exists so that when your vet says “here’s what we can do,” your answer can be “let’s do it” rather than “what can we afford?”
That’s the job of pet insurance. You don’t have to hope that something will not go wrong – if it does, you’re ready with a plan.
In our next post, we’ll tackle the question every pet insurance customer eventually asks: why does my premium keep going up?
