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How Does Pet Insurance Work & What Does it Cover?

Here’s a scary fact: almost 70% of Americans have less than $1,000 stashed away for emergencies. Another scary truth for you: healthcare is getting more expensive every year, including veterinary care for your beloved pets. What would you do if your closest canine companion or favorite feline friend suddenly needed life-saving surgery? Would you be able to afford it? For most of us, the answer is a resounding no.

So, what is a loving pet owner to do if they can’t afford premium healthcare for their pets? Pet insurance is the answer, though not many people know about it or understand what it is. For those of us who can’t afford emergency healthcare services for our pets, which is most people, pet insurance offers peace of mind; a way of knowing that the bases are covered, even if you don’t have money in the bank to account for the costs of healthcare.

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What is Pet Insurance?

Just like regular health insurance, pet insurance is there to cover your pets in case of some unforeseen circumstances, such as illness or injury.

Without pet insurance, if your pets get sick or injured, the only way for you to receive veterinary attention is to pay for it out of pocket. If the issue is minor, such as a case of fleas, then this might not be such a big deal to cover. But if your pet were to be hit by a car and need serious attention, the bills could be astronomical. Would you be able to cover a vet bill of several thousand dollars or even more? Most people wouldn’t.

That’s where pet insurance comes into play. You pay a small monthly fee for your pet insurance. Then, if something should happen, insurance will reimburse you for the exorbitant costs.

If you didn’t have insurance, then you’d have to pay for those services in their entirety. Even if you could pay for it out of pocket, it would be a massive blow to your bank account. With insurance, you’ll still have to pay for the procedure upfront, but the insurance company will pay you back.

Pet insurance
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What is Covered by Pet Insurance?

Different pet insurance plans cover different things. To be certain of what a particular plan covers, you’ll need to read through it and ask questions of the representative you’re dealing with. But in general, most pet insurance plans will cover accidents and illnesses. This includes a wide range of incidents, including broken bones, cancer, other diseases, injury from accidents or dog fights, and more.

What Isn’t Covered by Pet Insurance?

Even though pet insurance does cover a wide range of different health concerns, there are quite a few things it won’t cover. For instance, very few insurance plans will include pre existing conditions. So, if your pet already has an illness, it won’t be covered by insurance. However, there are a few select plans that might cover preexisting conditions if they’re curable.

Other things that are usually excluded from insurance are:
  • Grooming
  • Routine veterinary visits and checkups
  • Preventative care
  • Behavioral problems
  • Hereditary conditions
  • Dental disease
  • Hip dysplasia

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Different Types of Pet Insurance

There are four basic types of pet insurance plans. The type of coverage you get depends on the type of plan you opt for.

Wellness

vet checking up on german shepherd
Image credit: Freepik

Wellness plans are most often sold as add-ons to existing health plans, though you can get wellness plans as standalone insurance. These cover very basic and routine healthcare, such as routine checkups, preventative care, and yearly vaccines. They will not reimburse you for pet injuries, accidents, or any type of emergency treatment.

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Accident-only

French Bulldog sick at vet
Image Credit: 135pixels, Shutterstock

This type of plan only covers emergency care that’s needed due to an accident. If your pet is hit by a car or breaks its leg in a ditch while running, an accident-only plan will reimburse you for the care. It will not cover illnesses, diseases, or routine care of any kind.

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Accident-Illness

vet treating dog skin disease
Image Credit: Oleksandr Lysenko, Shutterstock

As the name suggests, accident-illness plans will cover your pet in case of illness or injury caused by an accident. So, you’ll be reimbursed for emergency care if your pet is hit by a car and injured or if it gets an illness such as cancer. This is the most common type of plan, accounting for nearly 98% of all pet insurance plans. It will cover most emergency care, but will not cover routine care, preventative care, or preexisting conditions.

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Accident-illness with Wellness

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Image credit: Ruth Black, Shutterstock

This is an accident-illness plan with a wellness plan added on. You’ll get all of the same coverage that a standard accident-illness plan reimburses you for, plus all of the coverage included in a wellness plan. This is the most comprehensive type of pet insurance policy, but it’s also the most expensive.

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What’s the Cost of Pet Insurance?

A lot of factors go into determining the cost of each pet insurance plan. You have to take into account the type of coverage you want, the type of pet you’re covering, the length of the insurance plan, the company offering the plan, and where you’re located. Furthermore, they’ll ask for a lot of information about your pet that will influence the price as well, including your pet’s age, size, weight, breed, and current health.

With all of this in mind, let’s discuss some average prices. In the United States, most people choose accident-illness coverage. A typical accident-illness policy for cats costs an average of $354 annually or just under $30 per month. It’s a bit pricier for dogs. A plan for a canine with the same coverage costs $566 per year, or a bit less than $50 per month.

Naturally, plans that offer less coverage have a reduced cost. Across the US, the average cost of an accident-only plan for dogs is $190 per year, which works out to just $15 and some change each month. It’s even cheaper for cats, with the average cost of an accident-only plan averaging out to just $11.75 per month, or $141 yearly.

If that seems expensive to you, then let’s compare the cost of insurance to the cost of out-of-pocket veterinary care. Imagine your pet is diagnosed with cancer and needs radiation therapy. The radiation therapy alone can cost up to $10,000, and that doesn’t even include surgery to remove tumors, which could cost more than $5,000 each time. While $566 per year for each dog might seem like a lot, it pales in comparison to the $15,000+ you might spend trying to cure your canine of cancer.

Pet insurance
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How do You Use Pet Insurance?

Pet insurance is easier to use than regular health insurance for a human. It’s also very simple to set up. First, you’ll have to find a policy that you wish to purchase. Most companies will require a checkup for your pet to ensure there are no underlying preexisting conditions that weren’t disclosed on the questionnaire.

Once you have insurance, you continue to make your monthly payments. If something happens and your pet requires veterinary treatment, you’ll take them to the vet and pay for the required treatment.

After the treatment has been administered, you’ll submit a claim to your insurance provider. They will do some paperwork and discuss things with your vet before reimbursing you for the veterinary care you paid for, in accordance with the terms of your insurance plan. Usually, this takes about a week.

What makes pet insurance easier than human health insurance is that you can get your pet treated at any veterinarian. There are no specific networks for you to stay within and there’s no co-pay. You’ll just pay upfront, and your insurance will pay you back after the fact.

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Important Insurance Terms to Understand

Before you jump right into a pet insurance plan, there are a few terms you’ll need to be familiar with.

Reimbursement

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This is what the insurance will pay you back for after you cover the cost of medical expenses. Depending on your insurance plan, reimbursement may be 50% of the total cost up to 100%. Plans that cost less each month will usually reimburse you for a lower percentage of the total cost, while more expensive monthly plans will reimburse a higher amount.

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Deductible

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The deductible is the part of the bill you will have to pay for out of pocket before the insurance company’s reimbursement kicks in. Deductibles can apply to specific incidents or an annual plan.

For deductibles on specific incidents, you’ll have to pay the deductible the first time a particular incident occurs, but the insurance will reimburse you for everything over the cost of your deductible. If the same incident occurs in the future, your deductible is already paid, so insurance will reimburse you the full amount, according to your plan.

Annual deductibles are the amount you must pay out of pocket towards the first medical expenses each year. If your pet gets hurt, you’ll have to pay the deductible portion of it without reimbursement, though the insurance will reimburse you for costs above your deductible. Should your pet get hurt again within that year, you won’t have to pay the deductible again. However, if your pet gets hurt the next year, you’ll have to pay that deductible once more, and this will be the same every year.

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Limits

Limits cap the amount that your insurance will reimburse you for each incident. If your per-incident limit is $5,000 but your pet requires $10,000 in medical care, you’ll have to cover $5,000 of that no matter what. Plus, you’ll have to cover the deductible if it hasn’t already been paid.

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Annual Limits

An annual limit is the maximum amount your insurance will reimburse you in a calendar year. If your annual limit is $10,000, then no matter what type of medical care your pet requires, you will be reimbursed a maximum of $10,000. Everything over that cost is up to you to cover.

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Finding Good Pet Insurance

Finding good pet insurance is a lot like finding good health insurance for humans. You have to do some research, and there are multiple ways for you to find them. In general, there are three main ways that people get pet insurance: employer benefits, marketplace options, and directly from provider companies.

If your employer offers pet insurance coverage, you can opt to go through them, though you may have limited options. You can also find a pet insurance marketplace that lets you choose from several companies. Pet insurance marketplaces include 365petinsurance.com and pawlicy.com.

The final way for you to find good pet insurance is to go directly to the source. Often, insurance companies that offer other types of insurance will offer pet insurance as well, such as Farmers or Lemonade. You can also opt for a company that’s focused specifically on pets, such as ASPCA Pet Health Insurance.

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Conclusion

In many ways, pet insurance is pretty similar to the health insurance you probably already have for yourself and your family. However, there are a few key differences, such as the fact that you’ll pay upfront for all veterinarian visits and be reimbursed afterward. With luck, you’ll never need to use your pet insurance, but as they say, it’s better to have it and not need it than to need it and not have it.

If something catastrophic were to occur and you didn’t have pet insurance, you might be stuck in the water without a boat or paddle, being forced to cover all costs out of pocket or watch your beloved pet suffer. Pet insurance acts as a safety net, offering protection and peace of mind for your pets and you.

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Featured Image Credit: Ekaterina_Minaeva, Shutterstock