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Accidents can happen to even the best pet owner. If your pet should become lost, proper identification can help to bring him home. More than one type of ID is recommended as a safety measure, just in case one form of ID fails (for example, a collar with tags could fall off).
Many municipalities require you to purchase a license for dogs - some even require licenses for cats too! Even if your cat stays indoors only, she still needs ID - scared or excited pets can slip out the door before you can stop them.