The Financial Ombusdman has thrown a lifeline to pet owners with cancelled 'lifetime' pet insurance policies, after a provisional ruling on Lucky the dog. Lucky is going to cost her owner a small fortune to treat a chronic skin condition, because the insurance cover she had from Halifax (which was set to run for Lucky's lifetime) was cancelled when the bank withdrew from the market.
The Ombudsman ordered compensation and a policy top-up, so what does it mean for other pet owners?
WithdrawnThe problem kicked off when Halifax, Lloyds and Petguard all pulled out of the pet insurance market. All three providers offered what is known as 'cover for life'. It means they will cover your pet even if they are diagnosed with an expensive, chronic condition, because the policy limits are reset every year at renewal.
Those who held these types of policy with these firms were unable to renew after November last year, and had to go elsewhere for cover. It meant that more than 30,000 pet owners are looking for new insurance.
Those animals, such as Lucky, that already had a pre-existing condition were unable to get cover for it elsewhere - leaving the owner to fork out for ongoing treatment, or face the difficult choice to part with the animal.
The rulingThe Ombudsman's ruling was for a £200 compensation payment and a 'top-up' for any insurance the owner buys for Lucky for the next three years - to cover the dog for pre-existing conditions. It criticised Halifax for calling this a 'lifelong' policy, when in fact it renews every year, and so could be withdrawn at any time.
What does it mean for you?If you have been left without cover, this ruling should prompt the insurers to find a comprehensive approach to deal with every animal with a pre-existing condition. Nothing has yet been suggested, but the banks are said to be planning a strategy, and the Financial Services Authority is said to be scrutinising this closely to make sure pet owners are treated fairly.
It is worth, therefore, starting by contacting the bank you held your insurance with, so you will be first in line when they have decided how to solve this issue.
If an appeal to the bank is unsuccessful, the Ombudsman should be the next step, as the provisional ruling is an excellent sign you should receive redress.
legal actionIf this is not satisfactory, there is a class action lawsuit being launched by Pet Alliance Watchdogs, organised by Dogs Today magazine. The group has not taken any action yet, but is calling for dissatisfied owners to get in touch on email@example.com. Beverley Cuddy, editor of Dogs Today told AOL: "We are heartened by this provisional ruling but we are not happy with the level of compensation"
She highlights that pet owners are facing very different situations, and while Lucky suffered a relatively inexpensive condition, there are animals with ongoing treatment costing £6,000 a year or more - where £200 would only make a tiny dent in the financial costs - let alone the emotional ones.
She adds: "We believe there are around 50,000 people affected - not all of whom have run out of cover yet. In many cases people don't understand what they have bought, and don't understand the implications of cover being withdrawn until they phone around for alternative cover. We are still open to people joining the group, wherever stage they are at in the process, and we can help them with writing letters to seek compensation, understanding what they can expect, and possibly to join the class action."