Pet Insurance: What You Need to Know

Marcela Otero
Mar 30, 2017
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Is pet insurance worth it?

Pet insurance is definitely worth it if you have a pet from a breed with a predisposition to chronic illnesses. Generally, the earlier you obtain the insurance, the lower the premiums and deductibles. Pet insurance can also be a good idea if you love your pet, but can’t afford the thousands of dollars that an emergency could potentially cost.

Getting insurance for your pet could potentially cost you more than it’s worth if it has a pre-existing condition—most companies don’t cover these—, if it’s an elderly pet, or it lives indoors and is generally healthy. When considering which plan to purchase, you’ll want to look at the differences in premiums, deductibles, and coverage.

Most pet owners will probably incur at least one emergency bill between $2,000 to $4,000 during the course of their pet’s lifetime. Some people prefer to put money into a savings account rather than pay for insurance, and though this can work for regular check-ups and small expenses, in the event of an emergency it may not be enough, especially if you’ve only been saving for a few months.

What are the pros and cons of pet insurance?

The pros and cons of pet insurance are difficult to determine without examining each pet’s circumstances.

Pros:

  • Peace of mind - insurance virtually guarantees you won’t have to make a life-and-death decision for purely economic reasons

  • Emergency care - insurance can defray the expenses

  • Long-term health issues - though most companies won’t cover pre-existing conditions, and some may also reset their coverage annually, insurance can make it easier for you to manage the costs of a recurring condition

Cons:

  • Cost - pet insurance can get very expensive in terms of premium, especially if you have a multi-pet household. However, this can still make sense per pet, and many companies offer multi-pet discounts.

  • Coverage - most pet insurance plans don’t cover regular check-up costs such as preventive health care, dental, or vaccinations

  • Pre-existing conditions - pet insurance companies don’t cover pre-existing conditions, so if your pet has an expensive existing condition, you will still have to pay for all the associated treatment yourself

How to choose the right pet insurance:

The first thing to evaluate when choosing a pet insurance company are the benefits offered, which can either have a lifetime term, or be capped on an annual or per-condition basis. The best—but most expensive plans—have no cap at all, which means you can provide your pet with the best care year in and year out, regardless of what antics your furry friend gets into. Pet insurance plans can also limit benefits by requiring waiting periods between enrollment and coverage—usually no more than thirty days—, and some have age restrictions as well, though this is less common.

What is a pet insurance deductible?

Pet insurance deductibles are the amount of money you have to pay out of pocket before the insurance coverage applies. Just like insurance plans for humans, petcare comes with a wide variety of deductibles, copayments, and premiums. Usually, pet insurance companies require that you pay your pet’s bills upfront and wait for reimbursement, but some companies have programs that pay vets directly. It’s important to remember that a low deductible means premiums will probably be higher, and conversely, if you’re okay with a higher deductible, your premiums will likely be lower. Generally, deductibles can be tracked two different ways:

  • Annually - one payment per year, no matter how many incidents your pet may have. This is best if your pet is accident-prone or lives primarily outside, which can expose it to more risky situations.

  • Per-Incident - a deductible is applied for each incident that requires veterinary care. For example, if your dog gets hit by a car, and you have a $100 deductible, that’s all you’ll pay at that time, regardless of how many visits the situation requires. Three months later, your dog eats a whole bag of candy and you have to rush him to the vet. That’s a separate incident, and you have to pay your $100 deductible, before your insurance kicks in.

What is a pet insurance co-payment?

Co-payments are a percentage of the claim settlement amount that you have to pay each time your pet gets a particular type of health care service. If your plan has this option, this means you’ll pay the co-pay percentage in addition to the deductible. 

For example, if your dog has to have an emergency procedure which costs $1,000, your deductible is $500, and you have 0% co-pay—you’d pay the $500 deductible, and the insurer would cover the rest. If, however, you had a 10% copay, then you’d pay the $500, and 10% of the remaining $500, for a total of $550. The insurance would cover the remaining $450.

How does reimbursement work with pet insurance?

Most pet insurance companies require that you pay your vet bill upfront, and then they reimburse you according to your coverage, usually between 70-90%. This is the reverse of the copay.

It’s important to make sure that the reimbursement is based on your final total costs, and not on the quote that vets generally give you before commencing treatment. Be sure to read the fine print carefully to be sure exactly what is covered and what isn’t. Another thing to watch out for with your plan’s reimbursement is whether they have a ceiling. Some companies are unlimited, whereas others allow you to choose between $5K, $8K, $10K or $15K. A higher ceiling will result in significantly higher premiums, though.

Pet insurance premiums explained

Pet insurance premiums are the amount of money that you’ll pay every month for your pet’s coverage. Insurance companies will look at many factors to determine this, including your pet’s age, breed, size, degree of coverage, and deductible amount. Where you live is also factored in, to account for differences in vet care costs.

Thoroughbreds will be more expensive to insure, as they have a greater predisposition to certain hereditary diseases, and you should be aware that companies don’t cover pre-existing conditions. Likewise, an older pet will cost more, so it’s always best to get insurance as early as possible.

When considering your monthly premium, if the amount seems a bit high, check if it’s because you’re also paying for extras like wellness coverage or emergency hospital boarding. It’s best not to choose a plan solely based on the lowest or highest price, but to read the fine print carefully and consider exactly what you’d be paying for. If it ends up being more than one or two dollars a day, odds are you’re being charged for things you don’t necessarily need.

Let’s look at some real-life examples from both sides of the fence:

  1. Cindy was a three-year-old cat who hadn’t had any real health issues. Her yearly vet bills averaged around $200, for things like vaccinations and flea control, so her owners never bothered to get her insured. One day, they noticed she’d become lethargic and her belly was swelling. They rushed her to the vet and it turns out she had an obstruction in her digestive tract. When they were just about to put her under for surgery, the vet realized it had started moving and called it off. Still, just the boarding, scans, fluids, etc. were $2,600, which had to be paid out of pocket. If Cindy had had health insurance, her owners would have saved almost $2,000.

  2. Koko is an 11-year-old Bouvier des Flandres. He developed a tumor at the base of his tail and required surgery to remove it. His insurance coverage provided 90% reimbursement and a $100 annual deductible. The veterinary bills ended up costing $21,600, but his owners only had to pay $3,500. In Koko’s case, insurance was a life-saver, as his owners could never have afforded the bills otherwise.

In the end, it comes down to your budget and a combination of the following factors:

  • Your pet’s lifespan

  • Number of vet visits

  • Number of emergencies

  • Insurance coverage

So, let’s say your dog lives 15 years, and your insurance premium is $20 a month for a basic plan, which doesn’t cover regular checkups or dental care. He has three procedures over the course of his life, which on average, cost $1,500 each, and your deductible is $500. Leaving inflation completely out of the picture, you’ll have spent $3,600 on premiums and $1,500 in deductibles, for a total of $5,100, during the course of your dog’s life. Even though you saved $4,500 for the three total procedures your pup had, you will still have spent $600 more on insurance.

However, purchasing health insurance for your pet can also save you a lot of money and anxiety. Without the security of pet insurance, even a small thing like a limp can make you think more about the health of your bank account than your pet’s wellbeing. It’s never a good idea to have to base life-and-death decisions on economic reasons. It’s impossible to predict the future and know for certain that your beloved pet won’t get into an accident or develop a life-threatening disease. This can be especially worrisome if it belongs to a breed predisposed to developing serious health concerns. To learn more about the different plans available to you, take a look at our ten best of the year page.