PHILADELPHIA — Money's a little tight right now for Fred Cratil as he and some relatives put the finishing touches on their new Italian restaurant.

The last thing he wants to do is worry about Bruno, his 6-year-old cairn terrier.

So when Cratil, who's working as a courier until the restaurant opens, made a delivery to the offices of Petplan in Philadelphia, he was an easy sell.

He became one of the first to buy pet health insurance from Fetch Inc., which sells policies under the name Petplan. Fetch, which started selling policies in July, was founded by Chris and Natasha Ashton, an English couple who discovered, while getting their MBAs at the University of Pennsylvania's Wharton School, how expensive a pet's illness can be.

Cratil now pays them about $270 a year so that any medical decision he makes about Bruno will be about the dog's health, not money.

Not that long ago, owners considered it normal to put a pet to sleep if the vet bill was getting too high. Plus, vets could only do so much to help.

Nowadays, vets can do orthopedic surgery, chemotherapy and kidney transplants. The change — and the dramatic increase in bills that goes with it — is driving interest in pet health insurance.

So far, only a tiny percentage of pet owners have pet insurance, but the number is growing. According to the American Pet Products Manufacturers Association, 3 percent of dogs and 1 percent of cats are insured, up from 2 percent of dogs and less than 1 percent of cats in 2002.

Veterinary specialty centers — those that deal with the most expensive animal problems — are seeing rapid growth in insurance. Barry Stupine, director of the University of Pennsylvania's veterinary hospital, said the portion of clients with insurance has grown from about 1 percent five years ago to 4 percent now.

As recently as the 1990s, veterinarian Rob Orsher, owner of the Veterinary Specialty and Emergency Center in Langhorne, Pa., saw only about one client with insurance a year. Now, his practice sees 15 to 20 a week.

Ken Drobatz, director of emergency service at Ryan, said it is not unusual to give families a quote of $6,000 to $10,000 for treatment of their pets. Some people can't pay that, no matter how much they love their animals. "It's just prohibitive. I couldn't afford that," said Drobatz, who is on Petplan's veterinary advisory board. "We end up euthanizing a lot of animals because of the cost."

All of this spells opportunity for the Ashtons, who learned about vet bills the hard way, went on to win the Wharton Business Plan Competition with their idea for a pet insurance company, and then followed through.

Their Fetch company holds the exclusive rights in the United States to use the Petplan logo and name through a licensing agreement with Petplan U.K., Chris Ashton said. Ashton declined to say how many policies the company has sold.

While pet insurance technically is property insurance, it uses the lexicon of health insurance. Companies offer policies with deductibles, co-payments and benefit limits. Some base their payments on a fee schedule they set rather than what veterinarians actually charge. Some include preventive care. Consumers need to pay attention to how plans cover congenital and pre-existing conditions.

Petplan insurance is designed to help pet owners with major medical bills, not routine care. It doesn't accept new pets older than 7. Its rates are based on where the owner lives and the age, species and breed of pet. Cats are cheaper than dogs. As a general rule, small dogs live longer than big ones, so owners of small dogs pay lower premiums. Insurance in the cheapest plan for a 6-year-old doberman, for example, costs $491.12 a year. A Yorkshire terrier of the same age costs $331.03. The policy for a small mixed-breed dog — they're the healthiest — is $202.67.

The company's fee schedule takes into account congenital problems, such as hip dysplasia, that plague certain breeds. These problems are often precisely why an owner would want insurance, said Ashton, 33.

The biggest pet health insurer in the United States is 24-year-old Veterinary Pet Insurance Co., which claims about 80 percent of the market and 400,000 active policies. It wrote $110 million in premiums in 2005, up from $85 million in 2003.

DOG AILMENTS

1. Skin allergies

2. Ear infections

3. Stomach upsets

4. Bladder infections

5. Benign tumors

6. Osteoarthritis

7. Sprains

8. Eye infections

9. Enteritis

10. Hypothyroidism

CAT CLAIMS

1. Urinary tract infections

2. Stomach upsets

3. Kidney disease

4. Skin allergies

5. Respiratory infections

6. Diabetes

7. Ear infections

8. Colitis

9. Eye infections

10. Wound infections

SOURCE: Veterinary Pet Insurance Co.