I have an automatic monthly transfer going into a interest bearing account for my dogs. We used to have pet insurance "just in case", but there are a number of limitations as to what they'll cover.
I had a large vet bill before insuring/self-insuring, and that hurt. I have had semi-large bills while self-insuring, and having cash set aside really helps ease the blow. Even if you can't cover it fully, covering a large portion greatly reduces how much you're actually out of pocket.
The one time I had to make a claim on pet insurance (during the few years that our second dog was insured), there was some reason why the pet insurance wouldn't cover it because it wasn't specified on the list of things that they'll cover. So not only had I spent money on premiums for a few years, I also had to cover the full cost anyway. Everyone's experience will vary depending on the dog, the insurer, etc. but that was the exact moment that I cancelled and started self-insuring instead.
My advice : set up an automatic transfer and treat it like a bill. Keep it completely separate from your other accounts and forget all about it. I use ING Direct (now Tangerine) as it isolated from my daily banking stuff, both in my mind and in reality.
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