Pet insurance premiums jump 29% - is it still worth it?
Pet insurance premiums have surged by almost 30% in a year, pushing annual cover for the average dog above $1700 and leaving owners to grapple with a tough question: is it still worth paying for? As vet bills continue to climb, some households are sticking with insurance for peace of mind, while others are choosing to build their own emergency fund instead.
Almost half of Australians would struggle to cover an unexpected $3000 vet bill, according to research from Canstar, while Finder found one in four pet owners have delayed taking their animal to the vet because they're worried about the cost.
It's a dilemma affecting millions of households.
Australia is home to 31.6 million pets, with 73% of households owning at least one animal companion, according to Animal Medicines Australia. Many of those pets joined the family during the pandemic boom, but as they get older, the cost of caring for them is starting to bite.
Australians spent a staggering $21.3 billion on their pets in the year to March 2025, including $1.9 billion on veterinary care. With treatment costs rising and pet insurance premiums following suit, owners are increasingly being forced to choose between paying more each year for cover or taking the risk that their savings will be enough if their pet needs expensive treatment.
Pet insurance costs on the up
Taking out pet insurance is one way to deal with these costs, but the premiums on these policies have undergone their own inflation -- in some cases, significantly.
Canstar's research found average annual premiums for accident and illness cover increased by 26% for dogs and 27% for cats over the last year. Average premiums for large dogs went up by 29%.
With annual insurance bills averaging over $1700 for dogs and almost $1000 for cats, it's hardly surprising Aussies are believed to have spent $1 billion on pet insurance in the 12 months to March 2025.
Experts say the increasing sophistication of animal care and veterinary procedures is a key reason for the increase.
But Canstar data insights director Sally Tindall says increasing demand on vet services is also to blame.
"There's been a rise in pet ownership since Covid," she says. "A lot of people decided that was the time to get a pet and so that is increasing demand, which is putting pressure on cost".
So is pet insurance still worth it?
Even before the latest premium hikes, many of Australia's pet owners had already decided insuring their pet was too much of a financial burden to be worthwhile.
Last year's Animal Medicines survey found 86% of cat owners and 76% of dog owners hadn't insured their pets, with most saying they thought the policies on offer were too expensive.
Of course, not having cover for your pet means you'll have to dip into your savings to cover any vet bills.
Experts say building up an emergency fund in a high-interest savings or mortgage offset account is a smart way to prepare for going down this self-insurance route.
Relying on your savings can be useful if you're only expecting to deal with minor or routine procedures or if you have an older animal with pre-existing medical conditions insurers may not agree to cover.
But experts warn vet bills for serious ailments can quickly swallow your savings.
"Pets can actually be quite expensive in the first couple of years... costs can come completely out of the blue and easily rise into the thousands, sometimes tens of thousands of dollars".
"Even if you are putting that money away every single month [into savings] for your pet, it only takes one major surgery or incident to completely drain that account," says Finder's insurance expert Ceyda Erem, who notes pet insurance can be useful if your animal has long-running health issues.
"With an insurance policy, you get an annual limit which refreshes every year, so you do have a bit more of a buffer to play with when it comes to getting treatment for your pet".
Three questions to ask before getting pet insurance
1. What are the future risks?
Some animal breeds are at more risk of health troubles than others. Ask your vet what conditions your pet could develop in later life and how much treatment would cost. Read more about the real cost of having pets in Australia.
2. Is my pet too old?
Experts recommend setting up a policy while your pet is still young, before they develop any pre-existing conditions that insurers could refuse to cover.
3. Does my pet have any pre-existing conditions?
Insurers may refuse to cover ongoing medical issues your pet already has, which could leave you paying much of the bill yourself, even if you have pet insurance.
What to compare to make sure you're getting the right pet insurance policy
If you've decided to take out pet insurance, Finder and Canstar recommend checking these aspects of each policy to get the best deal.
1. Level of cover
Most policies will require you to cover a portion of the vet bill, called an excess or copayment. This can vary by policy, with Canstar finding some policies require you to pay for as much as 40% yourself.
2. Limits
These are caps on the amount you can claim every year. According to Finder, these can vary from $2,000 to an unlimited amount. A lower limit usually means a cheaper policy, but note that serious vet procedures like surgeries can exceed $20,000.
3. Better deals
Canstar found you could save up to 42% over a year by choosing a cheaper provider over a more expensive one, so shop around and see if different insurers will provide you with a similar policy for less.
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