Understanding Pet Insurance: A Comprehensive Guide

The love of a pet is priceless, but veterinary visits can be costly. Whether your pet faces a medical emergency, a serious illness, or just needs a routine checkup, pet insurance can help manage these expenses. Pet insurance covers eligible costs from vet visits, but the specifics can vary widely from one policy to another.

How Does Pet Insurance Work?

Similar to health insurance for people, pet insurance helps pet owners cover the cost of medical care for their animals. You purchase a policy from an insurance company, pay premiums, and file claims when your pet visits the vet for covered care. Typically, you pay the vet out of pocket, and the insurance company reimburses you for a portion of the bill, minus any deductible.

Important Terms to Know

When considering pet insurance, it’s essential to understand the following terms:

• Annual Premium: The amount you pay for pet insurance coverage. On average, pet accident and illness insurance costs $640 annually for dogs and $387 for cats. Premiums can vary based on factors such as the type and breed of pet, your pet’s age and health, your location, and the coverage you choose.
• Deductible: The amount you pay out of pocket before insurance covers the rest. Deductibles typically range from $100 to $500 and may be annual or per-treatment.
• Reimbursement Rate: The percentage of costs the insurance company reimburses. Reimbursement rates generally range between 60% and 90%, although some plans offer 100% reimbursement.
• Coinsurance: The percentage of costs you’re responsible for, usually ranging from 0% to 40%. In a plan with 10% coinsurance, you pay 10% of a claim’s costs (plus any deductible), and the insurer pays 90%.
• Waiting Period: The time before coverage begins, typically about two days for accidents, two weeks for illness, and six months for orthopedic issues.
• Policy Caps: Limits on how much the policy will pay out, which may be annual, per-incident, or lifetime maximums.
• Exclusions: Conditions not covered by the policy, often including pre-existing conditions, chronic illnesses, or hereditary health issues common to specific breeds.

Which Pets Does Pet Insurance Cover?

Pet insurance usually covers dogs and cats, although some plans exclude certain breeds or charge more for them. “Exotic” pets, such as guinea pigs, ferrets, rabbits, birds, amphibians, and reptiles, are rarely covered. Nationwide is one company that sells exotic pet insurance, while PetAssure offers a wellness plan for exotic pets, though it won’t cover medical emergencies or illnesses.

What Does Pet Insurance Cover?

There are three basic types of pet insurance: accident-only insurance, accident and illness coverage, and wellness coverage.

Accident-Only Coverage

This insurance covers treatment for accidents or injuries, such as being hit by a car, eating rocks or poison, tearing a ligament, or being stung by a bee. It doesn’t cover illnesses, pre-existing conditions, or preventive and routine care, such as vaccinations.

Accident and Illness Coverage

In addition to accidents and injuries, this insurance covers short- and long-term illnesses, such as ear or skin infections, cancer, diabetes, arthritis, or digestive issues. It doesn’t cover pre-existing conditions or preventive and routine care.

Wellness Coverage

If you want help paying for preventive care and routine vet visits, you can purchase separate wellness coverage. This typically covers things like vaccinations, dental cleanings, check-ups, and treatment or prevention for fleas, ticks, and heartworms.

The specific treatments, procedures, and conditions covered can vary from one plan to another. For example, some plans may cover X-rays, blood tests, or prescription drugs, while others may not.

How to Buy Pet Insurance

Follow these steps to buy pet insurance:

1. Determine the Coverage You Need: Decide whether you want wellness, accident-only, or accident and illness coverage. Make a list of specific concerns you want covered, and consult your vet about common health issues for your pet’s breed.
2. Research Pet Insurance Carriers: Check if your existing home or auto insurance carrier offers pet insurance. Search online, ask your vet and fellow pet owners for recommendations, or visit the North American Pet Health Insurance Association (NAPHIA)’s list of member companies.
3. Compare Coverage and Quotes: Get price quotes from individual insurers or use a site like Petted.com to compare quotes. Evaluate policies based on exclusions, definitions of pre-existing conditions, waiting periods, coverage maximums, reimbursement methods, and deductible applications.
4. Buy a Policy and Enroll: Purchase pet insurance and enroll your pet online by providing information such as the type and breed of animal, your pet’s age, and your ZIP code. Policies usually renew annually, and you can typically pay the premium annually, quarterly, or monthly.

How to Save Money on Pet Insurance

Pet insurance can be expensive, especially if you have multiple pets. Here are some ways to save money:

• Choose a higher deductible: Higher deductibles generally mean lower premiums.
• Select a lower reimbursement rate: Reducing your reimbursement rate can lower your premiums. If you’re comfortable covering a larger portion of the bill for expensive treatments, you could save each month.
• Get insurance early: Younger pets are less likely to have pre-existing conditions, and insurance companies may not offer coverage for older animals.
• Avoid unnecessary coverage: Budgeting for preventive care could eliminate the need for wellness coverage. You might also save by purchasing standalone coverage for specific illnesses.
• Ask about discounts: Insurers may offer discounts for bundling pet insurance with other policies, insuring multiple pets, or through your job or membership organizations. Discounts may also be available for service or therapy dogs, pets adopted from shelters, spayed or neutered pets, and microchipped pets. Paying your annual premium in full or online could also earn a discount.

Do You Need Pet Insurance?

Is pet insurance necessary? On average, routine and preventive veterinary care costs $485 annually for a dog and $365 for a cat. Surgery for a pet can cost $1,500 to $7,000 or more, and treating a common urinary tract infection can cost $300 to $1,500. These unexpected expenses can be significant, but you’ll need to consider the annual premiums, deductible, and reimbursement rate to determine if pet insurance is worth the cost.

For example, if your plan has a $500 annual premium, a $200 deductible, and reimburses 90% of covered costs, a $1,000 vet bill would result in $700 reimbursed to you after the deductible. Subtracting the $500 annual premium, you’re ahead by $200. However, a $500 vet bill would result in $250 reimbursed, leaving you $250 out of pocket after the annual premium.

Pet insurance could make sense if:

• Your pet is older and may face illnesses like arthritis or cancer.
• Your pet could have breed-specific health problems, and you can find a policy to cover them.
• You couldn’t otherwise afford to cover a major veterinary expense.

Even with pet insurance, you’ll need to pay out of pocket for vet care and wait for reimbursement. Building an emergency fund can help cover unexpected expenses until your insurance payment arrives. You could also start a separate savings account for pet care costs.

Do I Need a Good Credit Score for Pet Insurance?

Pet insurance is categorized as property and casualty insurance, like car and home insurance. In some states, insurance companies can check your credit-based insurance score when you apply for auto or home insurance. While it’s unclear if pet insurance providers check this score, your pet’s age, health, breed, and coverage levels will have a more significant impact on the cost of pet insurance than your credit score.

The Bottom Line

Personal loans and credit cards are other options for paying a big vet bill. A good credit score can help you get favorable interest rates on these and other types of credit. Just as you take care of your pet’s health, make it a habit to monitor your credit health. Experian’s free credit monitoring service can help you keep tabs on your credit report, track your credit score, and get alerts of important changes that could signal fraud.

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