Like humans, pets are subject to unexpected illness and injuries. The cost of veterinary care for a sick or injured pet is out of the reach of many families, giving rise to increasing demand for pet insurance.

Although pet insurance is not typically part of a financial plan, it might be a prudent choice for any client who belongs to the growing group of about 55% of Canadians who own pets. Canadians have more than seven million cats and five million dogs, according to study entitled Paws and Claws. Conducted in 2001 by Ipsos-Reid Corp., the study also found one in 10 households has both dogs and cats, and that 70% of Canadian pet owners believe pets have the same rights to health and happiness as humans.

The American Animal Hospital Association in Denver, Colo., says two out every three pets will be stricken with a serious illness or injury during their lifetime, making pet insurance a good way to pay for veterinary care.

“Pets are becoming more and more a part of the family,” says Derek Tupling, spokesperson for Allstate Insurance Co. , based in Markham, Ont. A recent pet owner study done by the American Pet Products Manufacturers Association, based in Greenwich, Conn., shows 74% of dog owners and 60% of cat owners see their pets as family members. As a result, it is becoming second nature for pet owners to acquire insurance for their pets, just as they would for their cars or homes. Allstate has teamed up with Pethealth Inc. of Oakville, Ont., to offer pet insurance through its agents.

“There are a number of options to choose from,” Tupling says. Policy terms and conditions vary widely. “As with auto or home insurance, pet owners can choose a policy ranging from about $15 to $85 per month that suits their specific situation.”

Pet insurance policies primarily provide coverage for dogs and cats for injury or death resulting from accidents and for a wide range of illnesses, including: cancer; cardiovascular, kidney and nervous system problems; infectious diseases; diabetes; bone fractures; burns; bite wounds; asthma; ingestion of a foreign object; allergic reactions; lacerations; and ingestion of poison. Surgeries, X-rays, hospitalization and medications may also be covered.

Some policies also offer coverage for preventive care, such as annual exams, vaccinations and deworming, and for liabilities resulting from damage caused by a pet to someone else’s property.

Depending on whether a policy is basic or comprehensive, coverage can be limited to a few common illnesses or can cover almost any illness or accident. The greater the range of coverage, the more expensive the policy. Premiums are also based on where the pet owner lives, and are generally lower in rural areas.

As with policies for humans, benefits provided by pet policies may be subject to maximums for specified illnesses or accidents, to deductibles on an annual basis or for each claim, to exclusions for pre-existing conditions and to renewal conditions. Pet owners may get a discount for multiple policies.

Pet insurance is sold by some insurance advisors, such as Allstate agents, or it can be purchased directly from the issuer, from selected distributors such as Toronto-based President’s Choice Financial, or through some veterinarians, breeders, kennels and shelters.

Randy Valpy, president and COO of Petplan Insurance, based in Winnipeg, says his company — which has offices across Canada and is associated with Petplan U.K., the largest pet insurance company in the world — has arrangements with more than 50 employee group plans whose members can buy pet insurance at a discount.

“Essentially, anything that can go wrong with humans can go wrong with their pets,” Valpy says. Accordingly, “the demand for pet insurance is rising.”

Although widely held for a long time in European countries such as Britain and Sweden, pet insurance is just starting to gain ground in Canada. Its popularity in Europe is the result of three factors, Valpy says: “It has been available for a lot longer; veterinary costs are relatively higher than in North America; and the human/animal bond is greater.”

The penetration rate for pet insurance in Canada is slightly higher than 1%, but this is expected to rise to about 10%-15% over the next few years, Valpy says. Tupling says this is largely due to the increasing cost of veterinary care, which has increased by an average of 8% a year in recent years.

@page_break@A U.S. report released in November found pet insurance revenue has risen 23% in the past year.

Entitled Pet Insurance in North America: the market and trends in the U.S. and Canada and published by New York-based research firm Packaged Facts, the report projects growth over the next five years and forecasts gross written premiums will grow by 24% annually to reach US$551 million by 2010. IE