NAOMI CAINE

If a new pet has arrived at Christmas, you should also think about pet insurance.

Dogs and cats under six months old are 60% more likely to require medical treatment than animals between the ages of one and three, according to analysis of claims data by Direct Line Pet Insurance.

The typical vet's bill is about £300. But it can easily spiral into the thousands if your pet has a chronic condition. The use of more sophisticated treatments and diagnostics can also push up the price of a trip to the vet. Of course, there's no NHS for your family pet, which is why many people take out pet insurance.

Prit Powar, head of pet insurance at Direct Line, says: "People can underestimate the cost of looking after their new pets and often leave it too late to get their animals insured. Younger animals' immune systems are still developing so they may be more prone to illnesses such as respiratory or gastric upsets."

There are four broad categories of pet insurance and the cheapest is usually accident only. Cover is typically limited to injuries sustained in an accident, perhaps if your pet is run over. However, some policies also cover emergency illness or illness that results from an accident.

Time-limited policies cover illness and injury, but only for a 12-month period. There is also usually a maximum amount you can claim for each condition, perhaps £2000. The limits apply to each separate condition

Time limited policies are better suited to acute, short-term conditions, or to pet owners who want to cover the immediate high cost of diagnosis and treatment. If you would prefer your policy to cover chronic, long-term conditions, such as arthritis, you could opt for so-called maximum benefit pet insurance. Again, there is a maximum payout for each condition, say £3000, but there is no time limit.

The most expensive option is a lifetime or lifelong policy. The pet is then covered throughout its lifetime up to a set amount each year, as long as the policy is in force.

Most pet policies these days cover complementary treatments, such as acupuncture and hydrotherapy, if they are recommended by a vet. You should also check whether the insurance includes public liability in case your dog or cat causes damage or injury to another person or their property. The limits for public liability vary but can be as high as £3m.

You can then normally add a range of additional benefits according to your needs and your budget. You might, for example, want to arrange cover for emergency care abroad. Or perhaps you want to include dental treatment for your pet. Another common add-on is cover for advertising and reward if your pet goes missing.

The premiums for pet insurance depend on the type of policy, plus a number of other factors including veterinary fees in your area, the breed, age and gender of your pet.

Most insurers will happily cover puppies and kittens from as young as a few weeks old. However, there is often a maximum age limit of nine or 11 years. It can therefore be tricky to buy a new policy if your pet is elderly, though you should be able to renew existing insurance.

Most policies come with a compulsory excess of about £50. You can often negotiate a lower premium if you are happy to pay a higher excess. Some insurers look favourably on owners who microchip their animals as they are easier to recover if they are lost or stolen. You can also save money on pet insurance if you cover more than one pet, or buy online.

Direct Line, for example, is currently offering a 10% discount if you buy online. You can also earn a discount of 25% if you insure more than one pet on the same policy.

Look out for promotions, too. Sainsbury's Bank is running an introductory offer of 12 months for the cost of nine, plus £30 to spend in store for new pet insurance customers who buy online. New customers with a Nectar card also qualify for an additional 5% discount.

It's important to be aware of any policy exclusions. Insurers almost always exclude pre-existing conditions. In other words, if your dog already suffers from epilepsy, the illness would not be covered on your pet insurance. Plus, you cannot normally insure routine procedures such as worming and neutering. Insurers also expect pet owners to keep up to date with vaccinations. If not, you could find that you are unable to make a claim. For example, an insurer could turn down a claim for cat flu if your cat has not received the recommended vaccinations.

The death of a pet is always upsetting. But it's worth checking whether you could claim on your insurance in the event of a death. Some policies include accidental death or death from illness, but would not pay out if your pet was put down.