Pet insurers face bills of thousands of pounds if microchips implanted in dogs and cats taken abroad fail to work properly.

The concern follows a report that one chip implanted in a dog, part of the 'pet passport' scheme that this week replaced the 100-year old quarantine rules, failed to show a reading.

The result is that an owner could face kennel bills of around £1,500 and be parted from their pet, even if they paid £250 to comply with anti-rabies rules.

If a non-functioning chip – which carries a unique identification number – causes a pet to be put in quarantine, it is likely the insurers will pay.

A spokeswoman for Saga Pet Insurance said the industry would "pass the buck back" to the Government and manufacturers to make sure adequate processes are in place.

Asked if pet owners would be covered in such circumstances, she said: "We keep a common sense approach and deal with cases on their own merits."