Pet Health Insurance 101
What is Pet Health Insurance?
Simply put, pet health insurance covers vet bills for unexpected accidents and illnesses.
Unexpected visits to the vet can be expensive. If an insurance plan does not already cover your pet, you don’t want cost to be a factor in the level of care they receive.
The average cost of an emergency visit to the vet starts around $1,000. And if the doctor recommends surgery, you can be looking at thousands more in the blink of an eye.
Thankfully there are options for the prudent pet parent.
Let’s be honest. Pet insurance isn’t for everyone.
But knowing what your options are and finding a plan that works for your family will prepare you to be strong when your fur-ball needs you most.
What Does it Cover?
First, it’s important to distinguish between wellness plans and insurance coverage. Wellness plans cover expected costs like checkups and vaccinations.
Pet insurance covers costs related to unexpected illness and injury. It’s also important to keep in mind that most pet insurance companies only include coverage for cats and dogs.
There are some exotic pet insurance companies, but they’re not as common.
Generally, pet health insurance covers:
- Emergency Visits
- Cancer Treatment
- Prescription Medication
- Specialty Care
When you get into the weeds of the different add-on coverage insurance companies offer, you can find some unique options worth considering. Those coverages include:
- Ongoing medication
- Prescription food
- Behavioral training
- Alternative treatments
- Advertising fees and rewards
- The cost associated with a canceled vacation
What’s Not Covered?
Pre Existing conditions are not covered under most insurance plans. It’s important to keep that in mind when comparing pet insurance options.
Nearly all companies restrict breeds with hereditary and congenital conditions. Very few companies will cover those conditions if your pet is healthy for a certain amount of time, but again, those companies are the exception to the rule.
For example, hip dysplasia is common in large dogs and usually not covered by the average insurance policy. Some conditions are breed-specific. For example, Cavalier King Charles Spaniels and Dachshunds are at high risk for heart disease. Sadly, most pet insurance companies refuse to cover the cost of specific medical issues because of a preexisting condition. And if they do offer coverage, it’s an add-on service.
As I mentioned, routine medical expenses are not covered by pet insurance. Here are some things the average pet insurance does not cover:
- Annual Checkups
- Lab Tests
- Behavioral Exams
- Dental Cleaning
Make no mistake about it, these add up quickly.
Thankfully, some pet insurance companies offer add-on wellness plans that cover routine visits to the vet. But honestly, if you’re good with money management, you can set aside a few dollars each month and cover these expenses yourself.
How Does it Work?
Most insurers have a waiting period after you sign up for coverage before the policy takes effect. Coverage can start in as little as five days, but it usually starts within a week or two. Before your plan starts, you’ll need to get a check-up and prove that your pet is not currently sick or injured.
So, let’s say you signed up, proved your dog has a clean bill of health, and your coverage kicked in. But, OH, NO! your dog ate something they shouldn’t have.
Unlike health insurance for humans, there are no networks for coverage. You can go to any licensed vet office and have up to 90% of the cost covered.
Pet insurers pay claims based on your actual, total vet bills. Here is a simple example of how pet insurance claims are calculated.
Lucy’s Vet Bill
- $4,140.81 Total cost of treatment
- 90% Your reimbursement level
- $3,726.81 Total claim paid to you!
Most companies will make you pay out of pocket first, then file a claim for reimbursement. Then, they’ll evaluate your claim and deposit the money directly into your bank account. Usually, the process takes 2-3 business days, but it can take longer depending on the complexity of your claim and the company’s policy.
The amount you’re reimbursed depends on the type of coverage you purchase. Once you pay your deductible, the insurance company will send you 50-100% of the total cost.
For example, let’s say your pet ate a big piece of dark chocolate and needs to be hospitalized for monitoring. After the initial intake fees, medical holding costs, and a week of medication, you’re out $6,000.
Being a smart pet parent, you already signed up for an insurance plan with a low deductible of $250, a 90% reimbursement rate, and $5,000 of annual coverage. 90% of $6,000 is $5,400. After the $250 deductible and the $5,000 reimbursement, a $6,000 emergency turned into an $850 out of your pocket.
That is an overall savings of 86%!
How Much Does it Cost?
Generally, the more you pay per month, the less you’ll pay per incident.
But it’s important to keep in mind the level of coverage you need. If you sign up for a plan with a $0 deductible, max reimbursement, and no coverage cap, you’ll likely pay more than $100 per month.
Species, breed, age, and location are a few factors companies use to determine the cost of pet insurance.
- Species – Dogs are more expensive than cats.
- Breed – Large breeds are more expensive than smaller ones.
- Age – Old pets are more expensive than younger ones.
- Location – Cities are more expensive than in rural towns.
Insurance companies take a lot into account when calculating your rate, but it is safe to assume that a young female kitten on a farm in Idaho is going to cost much less to cover than an old male German Shepard in New York City.
Where are the Hidden Costs?
It is important to keep in mind that, just like other types of insurance, there are deductibles.
Of course, you can pick the amount of coverage you want and have a $0 deductible – meaning you pay nothing for emergencies covered by your plan. But that usually means you’ll pay a higher monthly premium.
You can also pick how much an insurer will cover. Typically, you can choose coverage between 50% and 90% – some companies offer 100% coverage. Again, the more you’re covered, the higher your monthly premium will be.
Beyond picking your deductible and percentage of coverage, the last thing to consider is coverage caps. You can also choose the max payout per incident, per year, and over your pet’s lifetime.
While this isn’t a hidden cost per se, it should factor into your decision making. The companies we recommend have unlimited coverage, but you can find more affordable pet insurance that covers up to a specific amount.
Maximum payout per incident is the amount your insurer will cover for separate injuries or illnesses. Once you reach the limit, the insurer will not cover anything beyond that amount.
Maximum payout per year is how much your insurer will payout in a 12-month coverage cycle. So, if you have a $20,000 annual limit, you can have multiple single incidents covered in that year.
Maximum lifetime payout is a limit most pet parents don’t need to worry about, but it’s essential to know. Depending on the type of coverage you choose, payouts can get well into the six-figures over the life of your pet. Some companies set a limit on the amount they are willing to cover over their lifetime.
While these costs aren’t exactly hidden, it’s certainly what they feel like when you’re relying on pet insurance to cover an expensive treatment.
Knowing what your options are as a pet parent better prepare you to make the right choice for your family’s physical and financial health.
Should You Enroll in a Pet Health Insurance Plan?
It’s important to consider insurance for your pet before an emergency happens.
For some people, doing anything for a pet is a no-brainer. Of course, you’ll keep them healthy no matter what.
For others, the well-being of a family pet comes down to cost. Pet insurance gives you peace of mind knowing that if an emergency happens, your pets will be in good hands and you don’t need to worry about going into debt.
But we think there are two important considerations when deciding if pet insurance is right for your family.
- Price – Before you shop around for insurance, you need to know what your budget is. If you only have $25 per month to spend on insurance, your search is not going to include a $0 deductible and 90% reimbursement for a 12-year-old corgi.
- Risk Tolerance – Some pet parents will wait until the last minute to think about insuring their pets. Are you willing to gamble with your pet’s health? Are you willing to go in debt if they’re not covered? The sooner you decide to get covered, the lower the monthly premium will be.
If you consider price and risk tolerance, you’ll know what to look for when comparing different insurance companies.
If you’ve already done some searching, you’ll know information can be scattered around the internet.
We ran into the same problem while researching insurance for our pets. That’s why we put together this easy comparison tool that lets you compare insurance and see who offers the best coverage for your family.
If you’re ready to find out what your options are, give it a try. It will save you time and money.