New breed of pampered pet services creates market for insurers

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With pet-friendly hotels, doggie happy hours and pet massages available today, this world might truly have gone to the dogs—and cats.

According to the American Pet Products Manufacturers Association Inc., 63 percent of households, or 69.1 million homes own a pet, and 45 percent of households own more than one pet. Of those, 43.5 percent own dogs and 37.7 percent, cats.

American’s love for animals seems to have reached new heights. Hotels across the country are adopting pet-friendly policies, offering guests a pet pillow or spa and gift packages for their furry friends upon check-in. Pet owners also are willing to pay for services such as grooming, boarding, pet sitting and mid-day walking, according to Small Business Trends Radio, which hosted a segment on “Pet industry Trends for 2006.”

“In America, the family pet often enjoys the elevated status of a full-fledged family member, and pet owners are demanding, and getting, special care and treatment for these pets,” said Caroline Roden, founder of Pet Services Expo. “The various segments of the pet service industry are enjoying runaway growth.”

According to Roden, segments that are experiencing rapidly increasing demand include pet resorts offering not only upscale pet boarding accommodations, but also play and camping programs, health spas, swimming pools and extensive retail sales areas; modern pet grooming salons that rival the finest human beauty shops; new dog daycare centers that book to capacity almost as soon as they open; and dog-training businesses.

The market for dog care has increased between 2000 and 2005, growing at an average annual rate of 4.3 percent, according to MarketResearch.com. Total pet industry expenditures are expecetd to top $38 billion in 2006. Of that, an estimated $2.7 billion will be spent on pet grooming and boarding services.

Pet industry protection

Pet owners willing to shell out such dollars to indulge their pets want to ensure that the people providing the pampering are protected. Thus, liability protection insurance is a must for anyone in the business, the National Association of Professional Pet Sitters says.

“Those engaged in commercial transactions of any form are exposed to lawsuits not only from their own negligence, but also from that of their employees or agents,” NAPPS notes on its Web site. “Particularly exposed are sole proprietors and partners who do not have the limited liability provided by the corporate umbrella.”

NAPPS has access to pet sitter coverage from Travelers Insurance Co., also administered by Business Insurers of the Carolinas LLC. The general liability coverage includes care, custody and control coverage for pets and property in the sitter’s care, whether at a client’s home, in transit, or at the sitter’s home.

Robert Thompson, president of Gibson Governor Agency Inc., agrees that professional liability coverage is a necessity. “Such services need coverage for customers’ pets, including not only while they’re at the facility, but also while they’re working on or with the pet,” he said. “The primary concern is coverage for injury or harm to the animal, so [pet kennels, grooming salons, trainers, etc. need] professional liability in the event that they’re sued for damage to the animal.”

Gibson Governor Agency’s program is $1 million of professional liability, animal floater coverage with limitations that vary per customer and typical coverages such as workers’ compensation, property and business interruption.

Similarly, Kennel Pak Inc., a subsidiary of Gentzler & Smith Associates, typically offers $1 million of professional liability and $1 million of general liability as basic coverage in its program for doggie daycares, kennels and pet sitters. The company also offers animal bailee coverage, which covers animals for veterinary bills in case the animal is injured or dies while in the service-provider’s care. Property coverage, crime coverage, personal property and other business coverages are also included, according to Stacey Vera, customer service agent.

NAPPS recommends pet sitters and their employees or agents be bonded, as well. “Because pet sitters have access to clients’ homes, this coverage will be important to clients who may worry about the possibility of theft,” it explains.

“People with pets are … actively seeking products and services to meet their needs—and they’re not afraid to spend money on their furry, feathered or scaly companions,” Roden said.

As proof, look at D.O.G. Development. The company was the first to franchise dog daycare and boarding facilities, and now has sold 33 Camp Bow Wow franchises.

This industry used to be centered on “mom and pop kennels with a house on the property,” Kennel Pak’s Vera said. “Now, we’re insuring bigger facilities, ones that have 20 employees and are in the city, and are getting an SBA (U.S. Small Business Administration) loan.” Her company’s Web site gets 4,000 hits per week.

Like the animals that it serves, “the industry that will serve this demand is growing by leaps and bounds,” Roden added.

For more information

Trade Associations:

American Boarding Kennels Association

1702 E. Pikes Peak Avenue

Colorado Springs, CO 80909

Phone: 719-667-1600 or toll-free 877-570-7788

Fax: 719-667-0116

American Pet Products Manufacturers Association

255 Glenville Road

Greenwich, CT 06831

Phone: 203-532-0000 or toll-free 800-452-1225