According to the North American Pet Health Insurance Association (NAPHIA), the pet insurance industry doubled between 2018 and 2021, with premiums exceeding $2.59 billion in the US in 2021. And while it’s still a relatively small industry, pet insurance can Pets can benefit families by absorbing some of the veterinary costs associated with pet ownership. But what does pet insurance cover? How does pet insurance work? Learn more about pet health insurance below to determine if it’s worth it for your furry family member.
Pet insurance is a health plan that the owner pays for on a monthly or yearly basis in exchange for reimbursing qualified veterinary expenses. When a vet sees a pet due to a covered condition, the owner pays the vet in full and then submits a claim to his or her insurance company for a reimbursement, which is dictated by the terms of the policy. Although most pet insurance plans are for dogs and cats, a few pet insurance companies offer coverage for other animals, such as birds, reptiles, horses, and rabbits.
There are usually three types of pet insurance plans to choose from.
- Accident plan only It will pay off qualified vet bills related to accidents such as broken bones or ingestion of foreign objects.
- Accident and illness plan It includes both types of veterinary care, giving the owner broader protection but at a higher cost. Diseases may include infections, cancer, arthritis, diabetes, and allergies.
- Routine wellness or preventative care Plans, which some carriers offer as an optional add-on or separate plan, provide reimbursement for things like vaccinations, flea treatments, and spay/neuter.
Deductibles, coverage limits, premiums, and the like can vary depending on the insurance company. Learn more about the various pet insurance plans and companies in the Best Pet Insurance Companies rankings for 2022.
Pet insurance mostly operates on a reimbursement basis. This simply means that you pay the vet up front and then file a claim to reimburse the expenses owed. Some companies, like Trupanion, partner with some vets, and you pay them directly so you are only responsible for paying out-of-pocket nonqualified costs.
When you buy a pet insurance policy, you choose a deductible, reimbursement percentage, and annual limit, all of which affect your premium and the maximum amount you can get back. Your deductible must be met before the insurance company issues the reimbursement. Eligible costs are then reimbursed based on the percentage you specify, typically 70% to 90% of the cost, and the policy annual limit also sets the maximum dollar amount you can claim each year. Some insurance companies offer an unlimited annual limit option.
Although the processes for filing and reimbursing claims can vary, they generally work as follows:
- Make an appointment with your vet.
- Take your pet to see the vet.
- Pay your vet bills in full.
- File a claim online or through the pet insurance company’s mobile app and include a copy of the invoice.
- Once the pet insurance company approves the claim, receive your allowable compensation by direct deposit or paper check in the mail.
The review and approval process can take a few days, two weeks, or even a month, depending on the company, policy, and scope of the incident or illness.
Most pet insurance plans operate on a reimbursement basis, so you can use your coverage with any licensed vet, specialist, or emergency clinic of your choice. Unlike human health insurance, pet health insurance does not have provider networks. However, some companies may have certain requirements to meet in order for your vet’s bills to be eligible for reimbursement.
What pet insurance covers depends on the plan you choose:
- accident only: Covers the costs of accidents incurred by the vet, such as ingestion of objects, being bitten by another animal, broken bones, and cuts.
- Comprehensive plan: It covers accidents and diseases, including allergies, cancer, genetic conditions, surgery, hospitalization, breed-specific conditions, and arthritis.
- Routine care: Covers preventative costs, such as dental cleanings, vaccinations, annual check-up fees, blood work, and spaying or neutering, also called a pet health plan.
No matter which pet insurance plan you choose, pre-existing conditions are usually excluded from coverage. However, some companies have a waiting period for some pre-existing conditions and will provide coverage if your pet has been symptom-free for a specific period of time, such as six or 12 months. Other companies will not offer any coverage.
Pet insurance plans usually have a waiting period for accidents and illnesses. The waiting period is the period between the activation of the policy and the entry into force of the coverage. For example, if the policy has a 14-day waiting period for sickness and your policy takes effect on the 1st of the month, sick visits won’t be eligible for reimbursement until the 15th.
Waiting times for accidents and illnesses are relatively short compared to waiting times for pre-existing accidents and illnesses. Although you can’t skip waiting periods, the sooner you get coverage for your pet, the less likely it is that a claim will be denied due to the waiting period and the sooner you get coverage for pre-existing conditions.
The main vet costs that pet insurance does not cover are pre-existing conditions, non-vet related costs, and regular care, unless you purchase a routine or health plan. Specific examples include:
- Cosmetic procedures such as ear clipping, dew claws removal, and tail docking
- DNA test
- Accidents or illnesses resulting from fighting, racing, cruelty or negligence
- Optional procedures
- preventive measures
- Experimental treatments
The daily costs of owning a pet, such as pet food, toys, vitamins, grooming fees, and boarding fees, are also not covered. However, some carriers, such as Embrace, will cover prescribed food if you have a health plan. There are also some carriers, such as Fetch, that may cover the boarding fee if the policyholder must be in the hospital for an extended period of time, usually four days or more.
Pet insurance policies, like most insurance policies, have a discount. Deductions, depending on your choice, will affect your premium. Higher deductibles generally lower your premium while lower deductibles increase your premium.
There are usually two options for the deduction. Annual deductibles, such as those used by Embrace, are similar to those found in a human medical insurance policy. Once the deductible has been met, no deduction will be applied to future claims during the term of the policy.
Other carriers may offer a per-accident (per case) discount. In this case, the deductible will be applied every time your pet goes to the vet for a new case. This kind of endurance may result in you receiving less compensation per claim.
It is important to ask how the deductible applies to the policy you are considering purchasing.
In 2021, average accident and sickness insurance premiums for dogs and cats were about $49 a month and $29 a month, respectively, according to the North American Pet Health Insurance Association (NAPHIA). However, you may find a pet insurance plan that fits your needs for much less.
According to Best Pet Insurance Ranking 2022, Lemonade offers the cheapest insurance for dogs at a monthly cost of $19.44 and for cats at a monthly cost of $11.00. The most expensive companies, on the other hand, are Nationwide for dogs at $56.74 per month and Trupanion for cats at $30.88 per month.
There are many factors that affect how much pet insurance costs, including:
- your zip code
- What kind of pet do you have
- The age of your pet
- Your pet’s breed
- The size of your pet
- Pet insurance discount
- repayment rate
- The type of coverage plan you select
- Annual limit
- Optional add-ons you may choose
- The company of your choice
Whether you need pet insurance is up to you. When considering the cost of veterinary care versus average pet insurance premiums, pet insurance may be worth it for your pet, your family, and your financial situation.
For example, you can pay $3,000 or more if your pet is hospitalized. If you pay $30 a month, or $360 a year, for pet insurance, you may be about to apply. In this scenario, you would have to pay your pet insurance premium for just over eight years to file a $3,000 hospitalization claim which is not worth it.
Additionally, having a breed that is more prone to certain health conditions, such as hip dysplasia, can lead to more visits to the vet or specialist and, in turn, more expenses that may be offset by a pet insurance plan.
If you already have a vet you work with and you trust, it may be worth taking the time to ask about the expected costs of certain procedures for accidents or illnesses. Compare these costs with different quotes and reimbursement percentages from pet insurance companies to help you decide if you need pet insurance.
Most pet insurance companies only cover cats and dogs, but there are some that cover other types of pets as well. Nationwide it has bird and exotic pet insurance, which covers small mammals, birds, reptiles, and amphibians. The ASPCA offers pet health insurance for horses.
Dental care is usually considered routine and, therefore, is excluded from coverage under most pet insurance plans. However, some may cover tooth extractions or surgery if it results from a covered accident, such as your dog breaking a tooth while catching a toy and it needs to be surgically removed. Additionally, some companies with pet health plans cover dental cleanings.
For more information about pet insurance, see the following guides:
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For more information about other types of insurance, see the following guides:
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