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Top Facts and Considerations for Pet Insurance

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Many Americans have found out the high cost of animal health care to their dismay. About 180 million pets have cost their owners about $60 billion a year, an estimate released by the North American pet Health Insurance Association. This includes about $15 billion spent on veterinary care, which is the third highest in terms of pet health expenditure. On the other hand, the average cost of insuring 1 million pets cost $595 million or an average of $595 per pet annually. It might seem a lot to spend on your pet, but it might be well worth it as this typically compares favorably to the costs of pet healthcare.

Just to be clear, this is not the same as dog bite insurance, which is typically included in homeowners’ insurance as an add-on.  You can think of dog bite insurance as third-party liability, meaning it will pay for any costs associated with your dog biting or injuring someone or something such as another dog.

The first pet insurance health policy issued was in 1982 to television star Lassie, so it is quite a new option as far as insurance goes. However, by 2009 the number of policies issued per year has risen by an average of 13.2%, so there is clearly a demand for them.

For many pet owners, the trick is finding the pet insurance that will give them the most bang for their buck.  While there are some top contenders, the best one for a particular pet will really depend on specific situations and the most likely scenarios in which insurance would be a viable option. This article will deal with what you need to know about pet insurance.

Pet health insurance is not the same as people insurance

Just because your pet is eerily human in many respects and you consider him or her as part of your family, this doesn’t mean the insurance company will as well. For insurers, your pets are property, and an insurance policy for them will read much like property insurance. This is not necessarily a bad thing, as property insurance policies, and by extension pet health insurance policies, are much easier to understand than your own health insurance policy.

Additionally, the following conditions are typical in pet insurance policies:

  • You can choose any vet you like as long as the vet has a valid license. There is no such thing as in-network vets, so you can go to any vet without having to worry about paying out-of-pocket expenses.
  • You can choose to cover accidents and illnesses, only accidents, or extended conditions.
  • You pay just a monthly average premium of $14 for barebones (no pun intended) plans up to $98 for plans with the most coverage for dogs, and this is even lower for cats. The premiums can vary slightly depending on a few factors including the breed and age of your pet, you location, and any add-ons you choose for the policy.

If you are familiar with basic insurance terms, it can be relatively easy to understand your pet insurance policy. In most cases, you pay a premium and you pay a deductible before coverage kicks in. The deductible is usually between $100 and $250 annually, meaning your insurance coverage kicks in when you exceed the deductible at any time during a calendar year.

In some cases, you might have a fixed out-of-pocket amount or co-pay, which with pet insurance means you have to pay a certain percentage of the total cost per service or visit, and the maximum for a co pay is 30%. For example, if your vet charges you $100, you pay $30 at most and the insurer pays $70.

What is a bit annoying about pet insurance is that you have to pay for the service first, and then file a claim with your insurer for reimbursement. Your vet will not do that for you, and some will even have signs telling you to pay them at the time of service. On the other hand, some vets will allow regular clients to “run a tab,” essentially, giving the pet owner time to collect from the insurance company before getting payment.

You can get insurance for other pets

While you can get insurance to cover the health of your pet bird or reptile, the choices are few. The biggest one is the Veterinarian Pet Insurance division of Nationwide, so there’s that. You might be able to find a couple more, but mostly they focus on dogs and cats, which represent 90% and 10% of policies issued,

Insurance might not be for you

This whole article is about pet insurance, and that includes discussing reasons why you probably don’t need it because it is not cost-effective. In a study looking at the top three insurers handling 90% of pet insurance policies revealed that the cost of insuring a relatively healthy pet exceeds the actual costs of maintaining the health of that pet over 10 years.

Of course, the picture can change when you mix in some serious illnesses such as heart disease or cancer. In such cases, the premiums were much less than the medical costs. Here are also unforeseen circumstances such as accidents when insurance coverage will certainly come in handy.

However, that is not true if you are getting insurance for routine healthcare. The overall cost of wellness care is not enough to justify the outlay of taking out pet health insurance. You would be better off paying the vet yourself from the money you saved from not getting pet insurance.

The report also found that pet insurance for wellness care isn’t worth the cost. According to the report, it’s probably better to pay for routine vet care out of pocket.

Some things you need to consider

The first thing you need to consider is if your pet has a preexisting condition. Chances are the pet insurance policy will not cover this. For instance, if your pet has frequent abdominal pains, the insurer might restrict coverage for any condition where abdominal pain is a symptom.  You should have a vet give your pet a complete physical checkup before getting insurance so you are aware of what might constitute as a preexisting condition.

Make sure that you discuss the topic of preexisting conditions and its effects on your coverage with your insurer before signing up. The medical records of your pet may include something you consider minor, but could have big consequences when filing a claim in the future.

The next thing you need to consider that insurers typically have a holding period before an insurance coverage kicks in. For instance, if you get insurance because you found out that your pet would need an expensive procedure soon, you will probably not be able to use it. There is typically a wait period of 14 days up to one year for illness, depending on the specific condition, and between 24 and 48 hours for injuries resulting from an accident. The wait period might be different for each state, however, so find out what applies in your location.

You should also find out the maximum payouts for a policy. Depending on the insurer, it might be the maximum for a specific illness, for the year, or over the policy’s lifetime. The payout conditions will have a big impact on the premiums and efficacy of the policy.

The last thing to consider is the insurer’s policies for increasing premium rates. Some increase due to inflation, age of the insured, or the medical condition of your pet.  Some insurers do not make it a practice to increase premiums for any circumstances when renewing a policy for a specific pet, but you cannot assume that. . However, some companies do not. Ask about rate increases before signing the policy.


The best way to think of pet insurance is the same way you consider your own health insurance. You hope you don’t need it, but you want to make sure you have it when you do. If you do choose to get insurance because you anticipate that serious medical care might be necessary, get highest deductible policy you can afford.

However, if your pet is relatively young and healthy, you might want to save the money you would have paid to an insurer into an emergency fund, just in case.

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