What Is Pet Insurance? Here’s All You Need to Know
Nearly 70% of all American households own a pet, and no matter how careful or responsible you are, an animal’s health always comes with uncertainties. That’s why it’s important to be financially prepared. Although preventative or routine care for pets is a start, you might need a little more coverage.
Unforeseen (and expensive) emergency care is impossible to predict and much too common. In fact, 1 in 3 pets will need emergency treatment within a given year. On top of that, the U.S. pet industry is increasing an average of 4% per year, topping $66 billion in 2016. Accidents like bites, fractures, and object ingestion can cost thousands of dollars to treat.
One way to address both the rising cost of pet care and the risk of emergencies is to invest in pet insurance. We love our pets, and insurance is one tool that enables us to care for them without financial burden.
What is Pet (Health) Insurance?
Pet insurance is a health care policy that was designed for your pet. The insurance policy helps to lessen the burden of expensive veterinary bills and cover any emergency procedures.
The concept of insuring animals began in Sweden in 1890 but didn’t reach the United States until 1982. That’s when the world’s most famous movie star pup, Lassie, received the first insurance policy. The popularity of the service has grown, and according to NAPHIA, 2.81 million pets were insured in 2019.
Pet insurance is similar to health insurance policies for humans and is meant to cover all or part of expensive procedures. Before the coverage begins, there is usually a deductible (out-of-pocket cost) that must be met.
It should also be noted that, much like human policies, pet insurance has its limitations. It’s important to understand all the basics before purchasing a policy. In this article, we’ll look at everything you need to know about pet insurance in a nutshell.
How Does Pet Insurance Work?
Pet insurance for dogs and cats works like any other human policy. You purchase coverage from a provider, and the plan reimburses you for certain expenses related to your pet’s healthcare. The best pet insurance companies will reimburse a member from 80% to 90%, and even 100% depending on the service. This is also after the deductible is met.
Like any other insurance policy, you pay a monthly premium to keep the coverage active. Once the deductible has been met, the provider will pay for the eligible expenses based on your reimbursement rate, up to your yearly maximum.
It can be difficult to understand all of the details before enrolling. The maximum payout limit will either be “per incident” or an “annual limit.” The best plans have annual limits with unlimited payouts.
Although this means you need to meet your deductible every year, the payout potential is unlimited. Considering how many older pets develop cancer and other diseases, an unlimited payout can be a lifesaver.
The waiting period will determine when coverage kicks in. Be aware that different plans and providers have different waiting periods, which can change depending on the condition. It’s imperative to always read the fine print.
What Does Pet Insurance Cover?
When it comes to pet insurance, most plans will cover the following:
- Unexpected injuries and accidents (like broken bones and foreign object ingestion)
- Surgery (like torn ligaments or cataracts)
- Illness and disease (like cancer, glaucoma, and parvovirus)
- Prescription medications
- Emergency exam fees
- Test/diagnostics (like blood work, x-rays, and MRIs)
Some pet insurance plans also include coverage for alternative therapies. For example, acupuncture and chiropractic care.
There are also services that most plans will not cover, which include:
- Routine care and wellness exams
- Pre-existing conditions
- Spay/neuter
- Vaccinations
- Specific exclusions
Although most insurance will not cover pre-existing conditions, some providers will agree to cover curable conditions after a certain waiting period with no recurring symptoms.
Pet insurance is typically offered in three different ways:
Accident-Only Plan
In this case, the policy only provides reimbursement for emergency care related to accidents. It does not cover illness or any breed-specific issues.
Accident-illness Plan
This plan provides coverage for both accidents and illness. This is the most popular of all pet insurance policy types and represents about 98% of plans issued in the industry.
However, this plan won’t cover pre-existing conditions or preventative care. You can expect reimbursement for everything else.
Accident-illness Plan with Wellness Add-on
The last type of plan is accident-illness with a wellness add-on. Routine wellness & preventative care pet insurance is the most comprehensive level of coverage and, thus, the most expensive. The only thing not covered is any pre-existing conditions.
When comparing providers, you’ll want to look for the right combination of comprehensive coverage and lifetime value.
How Much Does Pet Insurance Cost?
The cost of pet insurance can vary greatly depending on a multitude of factors. The majority of pet owners spend anywhere between $20 and $60 per month ($240 to $720) every year. Vaccines will run around $25 – $40 each.
Some of the factors that will affect pricing include:
- Size (weight and height)
- Location
- Age
- Breed
- Indoor and outdoor risks in the area
- Policy provider
- Reimbursement rate
- Deductible
- Payout limit
- Plan type
- Term and length of insurance policy
When comparing different policies, make sure you read all the fine print. Understand any exclusions and distinct per-condition waiting periods. You should also research which conditions your breed is most at risk.
Where Should You Buy Pet Health Insurance?
By now, there are numerous pet insurance companies to choose from, it simply depends on what you need. The following are some of the top brands on the market with a monthly average cost:
- Embrace – $25.25
- Figo – $31.13
- Nationwide – $33.08
- PetFirst – $34.95
- ASPCA – $39.94
Additionally, it’s a good idea to examine the benefits allowance of each plan before buying. This can help determine if the plan balances affordability with the quality of coverage.
If you’re looking to secure the cheapest pet health insurance plan, select coverage that comes with a low monthly premium. This is usually a plan with a higher deductible, lower annual maximum, and lower reimbursement level.
Conclusion
For some potential owners, the prospect of expensive medical bills can be a deterrent to adoption. In other cases, the cost of expensive procedures and medication can lead to the tough decisions of economic euthanasia. Something no pet owner ever wants to go through.
Routine preventative care for your pet is the first step in ensuring they live a long and healthy life. The other important factor is a strong insurance plan. The right policy can help consistently provide your pet with diagnostics and treatments without serious financial risk. Most importantly, pet insurance provides sound peace of mind for pet owners. The promptness and ease of care alleviates a lot of stress during tough times.
After you’ve chosen a plan, come visit our Flagstaff, Arizona clinic. We’ll get you started with a routine preventative care plan that optimizes your new insurance! Reach out for an appointment today.