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What Factors Impact Your Pet Insurance Premiums?

two brown and white dogs running on a dirt road

Pet insurance behaves very similarly to other types of common insurance - you pay premiums, just like with home or auto insurance, and you reduce the financial risk when you need unexpected medical care for your pet. And while the concept is relatively simple, one thing that can confuse many fur parents is how the premiums (your monthly cost) are determined. 

What Are Pet Insurance Premiums?

Pet insurance premiums refer to the amount you'll pay for your pet's insurance policy. This cost is influenced by a variety of factors, including, but not limited to, the pet's age, breed, location, and species (for example, dogs tend to have larger vet bills than cats) per year.

When you purchase an insurance policy for your pet, you’re transferring some of that financial unknown risk of unexpected accidents or illnesses from yourself to the insurance company. Since the insurance company is then taking on some of that risk, they have a few key factors they look at to calculate and determine a fair premium price for its members. As mentioned, your pet's age, breed, location, and health risks all play a role in this decision. 


The rule is rather straightforward, usually the older your pet is, the higher the pet insurance cost. The reason is that older pets are more prone to illness and other medical conditions than younger ones. 

For pet insurance companies, it'll be unfair to charge the same premium for two dogs with a significant age difference, even if they're the same breed and live in the same town. Said another way: an 8-year-old Golden Retriever will likely require more medical attention than a dog of the same breed in their younger years, as they are more prone to illnesses, diseases, and other conditions like hip dysplasia or cancer. In other words, the risk of the cost of care for a senior pet will be greater. 

But the good thing is that some pet insurance companies, like PHI Direct, are finding ways to ease a fur parent's concern when paying for premiums for their senior dogs or cats. For example, PHI Direct is committed to the fact that no age-based deductible will be applied to a policy as a pet ages. In other words, the deductible for a 10-year-old dog remains the same as when he was five. 


Not all pet insurance companies are created equal, some charge higher premiums for certain breeds, while others may not. This could be due to the breed being at increased risk of developing certain illnesses or conditions or simply because they are more expensive to insure. 

For example, due to genetics, certain pets may be more susceptible to certain issues like hip dysplasia and eye conditions. Hence, pet insurance companies will often charge higher premiums for specific breeds. 


Where you live will also impact the cost of your pet's premiums. This is because certain areas of the country have a higher cost of veterinary care. As technology advances, many veterinarians use more sophisticated (and expensive) equipment, and this can mean your pet is receiving exceptional care and treatment, but you may need to pay more to do so. Some provinces in Canada have higher medical costs than others, so pet insurers may charge more in these places to help pets receive appropriate treatment at the right time. 


The deductible chosen by the policyholder also affects the premium. A higher deductible often results in a lower monthly insurance rate. When the pet owner has to pay more upfront for their pet’s veterinary treatment, it means the pet insurance company carries less risk. But then again, if your pet has an illness or accident while still paying off the high deductible, it could cost you more out-of-pocket. 

Reimbursements are meant to cover some of your expenses, so weigh the pros and cons before selecting a deductible that makes the most sense to you.

Coverage limits 

The policy limit is the maximum amount an insurer will pay for the medical care of a pet based on the policy conditions (some policies are annual while others have per-condition limits). The higher the coverage limit, usually the more expensive the premium.

Think about your pet's needs when deciding on a coverage limit. In Canada, a “common” maximum coverage is $10,000 per year, which is often enough coverage for most conditions a pet may experience in a year. However, there may be instances where a pet’s care could exceed that so it’s important to weigh the benefits and risks and determine what’s best for you and your pet. 


This is the portion of a claim you are responsible for paying. Most pet insurance policies have co-insurance, meaning that you share the cost of treatment with your insurer. The insurer covers that percentage of the total bill (after the deductible is met). The higher your policy's co-insurance rate, the lower your premium. 

Pet Insurance Discounts With Co-insurance

cat and dog sitting on wooden bench

Some pet insurance providers in Canada offer a multi-pet discount. For example, PHI Direct offers a 5% discount when covering two or more pets simultaneously.

Last Thoughts 

Understanding the pricing factors in pet insurance allows you to make an informed decision when selecting the right pet insurance policy, ultimately balancing financial affordability with the breadth of protection for your furry family member. Remember, while cost is a crucial consideration, the primary aim of pet insurance is to ensure that your pet receives the necessary care they need with less burden for you on hefty veterinary bills.

For more information and advice on pet ownership, check out our blog today. To get a pet insurance quote for your pet from PHI Direct click here.