You can buy pet insurance in supermarkets these days – with application forms sitting alongside the tins of dog food. But while UK animal lovers happily spend more than £2 billion on presents for their pets each Christmas, only 15 per cent of pet owners bother with insurance.

For many it seems an unnecessary expense and some insurance schemes have been criticised by consumer watchdogs for inadequate cover and high costs. The annual premiums work out at approximately £50 to £500 a year to cover a dog and £30 to £200 for cat insurance, so an owner could end up paying £5,000 over the life of a pet. And the insurance will hopefully never be needed.

So it’s NOT worth it?

Not until the day you need it. It is estimated that 40 per cent of the cost of owning a dog goes towards vet bills and one in three pets visits the vet each year. One owner whose dog ate a complete box of Christmas lights would have had to pay £600 for the vet’s bill had she not had insurance costing £23 a month. Another was faced with a £1,500 bill for treating a dog's torn ligament. The cost of treating heart problems is around £1,000 and arthritis will set you back more than £450. Some animals develop illnesses that can require years of treatment.

Advances in veterinary medicine mean sick or injured animals can live much longer than they would have 20 years ago – as long as the owner can afford to pay the bills for expensive and ongoing treatment. Pet insurance gives you peace of mind… at a price.

So it IS worth it?

Well that depends on how often your dog eats a whole box of Christmas lights – or in the case of one, drinks a whole bottle of Baileys.

Spread out over the lifetime of your pet, insurance can be an expensive luxury if nothing goes wrong. You may spend hundreds of pounds each year just in case something happens.

And of course there are clauses. Routine treatment is generally not covered. If you already have something wrong with your pet – then the insurance policy is almost certain to have an exclusion clause for known health issues. There will be capping limits on treatment costs; premiums often increase as your pet gets older, and of course some breeds are more expensive than others.

Some owners even negotiate special terms for their animals, requesting cover for alternative medicines, dental treatment and counselling sessions.

What else is covered?

Most policies will pay for costs of advertising and a reward if your animal is lost. Some also cover legal costs - useful if your dog worries sheep or bites someone. And if a motorist swerves to avoid running over your cat and ends up crashing into a wall, you could be covered for the damage to the car.

Other insurance providers offer polices that pay for kennel or cattery fees should you be hospitalised. A few schemes even pay for holidays cancelled because of a sick animal. And a handful of the top-of-the-range schemes will even stump up for your unruly pet to have sessions with an animal behaviourist.

What types of insurance are there?

There are two basic types of pet insurance: Annual policies and cover for life. Annual cover can be as little as £4 for a cat and £7 for a dog – but you have to be careful about what is included in that kind of basic scheme.

Pedigree animals cost more, but then a valuable animal can be covered for theft, and a large sum provided for the replacement of a stolen cat. You can even get a bonus if your pet helps catch a burglar, although this tends to be rare.

Which breeds are most expensive?

If you want to keep costs on a tight leash perhaps the best bet is to get a mongrel – generally more robust than pedigree breeds – and devote your time to training it properly so it won’t eat things it shouldn’t or run across a road.

Pedigree and rare breeds, such as those in the list below, are most expensive to insure, as the list below shows:

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

Breeds with most claims:

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

Breeds with fewest claims:

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

Finding an insurance provider

There are companies that specialise in pet insurance, otherwise many other popular general insurance firms, retailers and specialist insurance providers all offer cover. Why not start by comparing the leading UK pet insurers? (compare pet insurance offers).