PET INSURANCE costs so much and comes with so many strings attached that many owners would be better off simply saving up and paying any bills themselves, according to the Consumers’ Association.

A survey for the association’s publication Which? found that although pet cover might give peace of mind, a single policy could cost as much as £5,000 over a dog’s lifetime, even if a claim were never made. Owners should shop around before signing up for a policy, and make sure they know what is on offer.

Which? conducted an analysis of 9,000 insurance premiums found that cost average between £50 and £500 a year to insure a dog and £30 to £200 a year for a cat. Premiums and excess payments both rise steeply if the animal is more than eight years old. Some companies even insist that owners foot a percentage of any bill on top of the excess, which very often defeats the object of the insurance in the first place.

The areas where people live also affect premiums. Based on postcodes across the UK, the premiums are higher in London and the South East, where vets’ fees may be higher. A number of pedigree dogs are also more expensive to insure,. Whilst some companies point out almost that mongrels are ‘cheap and cheerful’ to insure.

Many companies limit total annual claims to between £4,000 and £6,000, and some limit the total amount that can be claimed for each condition. Some firms will also stop paying out if a medical condition lasts more than a year, and most will increase the premium after a hefty claim – again defeating the object of pet insurance to start with. Claiming on a policy can cost between £50 to £100 in excess fees, and on top of that some 15 to 35 per cent is levied on the total cost of the claim.

On the plus side, pet insurance can be very beneficial, given high veterinary treatment costs. Policies will pay out in the event of an accident or illness, with many owners specifically taking out insurance to cover liability — usually at least £1 million — if a pet is involved in a road traffic accident. Insurance also brings security that heavy vets’ bills will be paid in full, depending on policy limits. It can cost as much as £1,500 to treat a dog’s torn ligament, £600 to treat a cat hit by a car and as much as £1,000 for a pet MRI scan.

Most companies will also pay for alternative therapies for pets, including acupuncture and homoeopathy, and even special diets and supplements, if such a course has been recommended specifically by a vet. Some will even pay for a pet psychologist – albeit at a price reflected in the premiums.

If a pet dies in an accident, companies will pay out up to £2,000 which can be used to buy a ‘replacement pet’. Some will also pay out if a pet dies from illness, although this is limited to the under-eights.

If a pet goes missing up to £2,000 will be paid for a replacement. Some policies pay towards the cost of advertising for lost pets and "missing" posters. Some also offer rewards of up to £1,000 for the safe return of a pet. With dog theft becoming an increasing problem in the UK, this helps provide some peace of mind for owners – particularly with ransom demands being rife for stolen pets.

Still with crime, on some more expensive policies owners may even get an insurance bonus of £750 if their dog helps to catch a burglar in the home and the offender is taken to court by police.

If people have to cancel a holiday because a pet needs life-saving treatment, the insurers usually pay up. Some will even offer the same deal if a pet goes missing. In a recent case a couple who cancelled a holiday when their dogs fell ill argued that the pets were "family members" and their insurer should pay up. The Financial Ombudsman disagreed.

If owners fall ill and need to spend time in hospital, pet insurance usually covers costs of care for the animal, up to a maximum of £1,500.

Routine costs of owning a pet, such as vaccinations and neutering, are not covered by insurance. Policy holders must also ensure that pet vaccinations are kept up to date.

Helen Parker, the Editor of Which?, said: "It’s hard to predict the likelihood of your pet becoming ill or being injured. Pet insurance certainly gives you peace of mind from being saddled with a vet bill you can’t afford. But some pet owners might prefer to simply save the money and pay for treatments if need arises."

The Which? Survey did not include top pet insurers Pet Plan and E & L, although no explanation for their exclusion has been given.

Most costly breeds to insure:

Beauceron
Bernese mountain dog
Bulldog
Deerhound
Dogue de Bordeaux
Estrela mountain dog
Great Dane
Irish wolfhound
Leonberger
All mastiff breeds
Newfoundland
Old English sheepdog
Pyrenean mountain dog
Rottweiler
St Bernard

Breeds with most claims:

1. Labrador
2. Retriever
3. cocker spaniel
4. Rottweiler
5. Alsatian

Fewest claims:

1. Yorkshire terrier
2. Standard poodle
3. Welsh springer spaniel
4. Flat-coated retriever
5. Beagle