Pet Insurance - cost of replacement

TheGardener

I am just reviewing my pet insurance and although our dear pooch is irreplaceable  - I am concerned about the cover provided by the pet insurance company I am with. We paid £1000 for a KC-registered puppy from a reputable breeder 3 years ago and that was considered a 'normal' price for the breed. He is a lovely, healthy, robust and charming pet. We love him to bits - that much is priceless. However, as many of us are aware, the price of puppies has risen astronomically in the past year and the same breeder is currently charging £3,500 for her puppies . I mentioned this to the insurance company during a conversation about renewal and was told they will only reflect the cost of what we paid.  I just wondered if anyone had any thoughts on this? My house insurance reflects its value today - not what it cost me 20 years ago for example. 

TELLIT01

Unfortunately that is the way pet insurance, and much other insurance, works.  Home insurance is a very different market precisely because house prices are increasing year on year and cover has to move with it. 

I was watching a programme recently about insurance fraud, not suggesting that's your motive. In hits instance a person had purchased a puppy which they had insured, but when it died was replaced free of charge by the breeder.  Fast forward to the replacement popping its clogs and the insurer refused to pay out because this dog hadn't cost them anything.  Surely the owner was still out of pocket.

tacpot12

TELLIT01 said:

Unfortunately that is the way pet insurance, and much other insurance, works.  Home insurance is a very different market precisely because house prices are increasing year on year and cover has to move with it. 

I was watching a programme recently about insurance fraud, not suggesting that's your motive. In hits instance a person had purchased a puppy which they had insured, but when it died was replaced free of charge by the breeder.  Fast forward to the replacement popping its clogs and the insurer refused to pay out because this dog hadn't cost them anything.  Surely the owner was still out of pocket.

It is not the price of houses that causes buildings insurance to increase, so much as the cost of rebuilding. Buildings Insurance reflects the cost of replacing your home (like-for-like) if it has burned down. Perhaps pet insurance should cover the actual cost of replacing your pet, but the premiums will be much greater than they are now because the costs of replacement is highly variable - breeders can charge what they like because there are relatively few breeders and lots of customers prepared to spend a large sum on a pet. The insurers could end up in bidding wars just to get the puppy they need for a customer. 

I would rather that Pet Insurance didn't cover the cost of replacement. I don't think it should a risk that should be insurable. No one has to have a dog or cat. Everyone needs somewhere to live. 

sheramber

I was never interested in the replacement cost part of the insurance as my pet was not a commodity to be  replaced.

You will also find that after a  certain age that  cover no longer applies.

IvanOpinion

sheramber said:

I was never interested in the replacement cost part of the insurance as my pet was not a commodity to be  replaced.

You will also find that after a  certain age that  cover no longer applies.

I agree we rescued 2 dogs last year, one a pedigree and one a 'designer' cross both from reputable breeders.  Cost the original owner thousands.  As I handed over a small donation to the rescue centre I was handed the papers for the dogs - I told the centre to burn them, that is not why we rescue dogs.

Aretnap

What do the policy documents say about how the replacement cost is determined?

Ultimately the insurer can define the terms as they wish, provided they're clearly communicated to the customer. Different types of policy have different approaches to replacement claims. 

Car insurance, for example, uses the current replacement cost rather then the purchase price - but that's because cars depreciate in value so the (second hand) replacement cost will almost always be lower than the purchase price. There would be some issues with pet insurance having a similar model - does a five year old dog even have a well defined "market value"? Is there much of a market for second hand pets? 

Home insurance (the better policies, at least) do offer new for old cover - which translated to pet insurance would mean a new puppy at whatever the going rate was at the time of the claim, even if it was more than the original purchase price. But home insurance is a bit of an outlier in the insurance world; most other types of policy don't offer new for old cover and if a pet insurer didn't want to offer it there's no fundamental principle that says that they have to.

The financial ombudsman's page on pet insurance is silent on how the replacement value should be calculated so it will come down to what the policy documents say. Do they say "we will pay the purchase price", "we will pay the cost of a replacement" or "we will pay the cost of a new puppy or kitten"? If they're clear on the point then I'd say fair enough; if they're ambiguous then you might have grounds for complaint if your interpretation was different to the insurer's

Soot2006

Having been through the ordeal of getting the "replacement" money for a sports horse who died unexpectedly in the prime of his life, I no longer even look at that part of my insurance contracts. The way I see it now is that any "replacement" money for an animal goes towards the wine and chocolates I will require to start my emotional recovery + maybe a contribution towards a new animal ...   Horses are only ever insured for "what they are worth" which is totally different from "what a buyer would pay for it" ...  In context, I could have sold this horse for £10,000 on the open market. He was insured for £3,000 which is what I paid for him as an untrained young horse, and the insurance ended up paying £1,200 (+ vet costs and "disposal" after he was put down). I don't even understand their calculations, my vets spoke with them, we had to send evidence of his competition results and show his untimely death was completely unpredictable, but short of taking it to court they weren't budging, and my heart was broken anyway.

(FYI, £1,200 buys a lot of wine and chocolate!)

ZaSa1418

@Soot2006 i imagine it is covid related. It is hard to get a true market value of the sports / eventing horses at the moment as so many events were cancelled last year. 

rs65

TheGardener said:

 I mentioned this to the insurance company during a conversation about renewal and was told they will only reflect the cost of what we paid.  

The important bit is what does your policy say?

Ones I have looked at recently are a flat sum of money or an amount up to what you paid

Does your policy say 'cost of replacement'?

sheramber

Normally they ask for a receipt and pay out that amount.

for example Direct Line say 

• Death from accidental injury or illness
  If your pet dies following an accidental injury, you'll get back up to £1,500 of what you paid for them. We'll do the same if they die from an illness, but only if they're under 11 years old.

Tesco say 

• Death from accidental injury or illness
  If your pet dies following an accidental injury, you'll get back up to £1,500 of what you paid for them. We'll do the same if they die from an illness, but only if they're under 11 years old.

petplan say

3. Purchase price

In the sad event that your pet gets lost or stolen, we’ll pay you the amount on your receipt or rehoming document – or the market price if you didn’t pay for your pet. Depending on the kind of policy you have, you may also be able to claim the purchase price of your pet if they die.

They do not claim  it is the cost of replacement.

rs65

In the sad event that your pet gets lost or stolen, we’ll pay you the amount on your receipt or rehoming document – or the market price if you didn’t pay for your pet. 

Market value is then defined as
The price generally paid for an animal of the same age, breed, pedigree, sex and breeding ability at the time you took ownership of your pet.