Pet Insurance: Coverage for Our Four Legged Family Members

Many studies have shown the positive benefits of having pets. You  would likely agree. If you’re like most Americans, 39 percent have at least one dog and 33 percent have at least one cat. And many Americans consider their pets as family members.

Love isn’t free, though. The Ontario Veterinary Medical Association has estimated that it costs more than $28,700 to own a 40-lb. dog for 13 years. A cat that lives to 15 will cost almost as much, $24,000. Food, grooming and other costs add up, but perhaps the one thing pet owners dread most is a trip to the veterinarian…especially in an emergency.

Pet insurance can help you enjoy the companionship of your pets without worrying about high veterinary costs. Individuals can buy coverage, but employers can also offer pet insurance as a voluntary benefit. Group pet insurance plans offer employees the convenience of payroll deduction payment and often discounts off the individual rates.

How Pet Insurance Works

Pet health insurance works like your own health insurance policy, with premiums, deductibles, coinsurance and limits. These determine how much the policy costs and what the pet owner will end up paying out of pocket when using coverage.

Premiums: Premiums will vary depending on species, breed, age and geographic location. Many insurers also offer a discount for insuring multiple pets.

Deductibles: Most policies have a deductible for covered services that ranges from $100 to $200. This means the insured must pay the first $100 or $200 of covered services before the policy will begin paying. To save money, insureds should select the highest deductible they can afford.

While major medical policies for humans have a calendar-year deductible, some pet insurance policies have a per-incident deductible. This means if a covered pet has more than one covered accident or illness per policy term, the owner will pay the deductible for each one.

Coinsurance: As in major medical policies, most pet insurance policies have a coinsurance provision. If a policy has an 80 percent coinsurance percentage, the insurer will pay 80 percent of all covered services after the pet owner meets the deductible; the owner will be responsible for the remaining 20 percent. The best policies pay a percentage of a veterinarian’s bill for covered services. Others will pay a percentage of a pre-determined benefits schedule, which limits the amount the policy will pay for a particular service.

Limits: Policies can have both per-incident and lifetime limits. As the terms imply, a per-incident limit applies to each covered accident or illness, while a lifetime limit applies to the lifetime of the insured pet. If these limits are too low, a policy might not provide enough coverage when most needed.

What services does the policy cover? Some policies will cover the cost of treating accidents only; for accidents and illness; and for accident, illness and preventive care/wellness. The latter policies provide the most comprehensive coverage. However, they also cost the most. Pet owners can save money by budgeting for wellness/preventive care expenses, keeping pets fit and healthy, and buying insurance to protect their budgets from the unexpected cost of accidents or serious illnesses.

Every policy will include a list of covered services. These should include the cost of office visits, surgery and possibly prescription drugs needed to treat covered accidents or illnesses. Some policies will pay a straightforward percentage of your veterinarian’s bill for covered services; others will pay a percentage of “reasonable and customary” charges, while others will pay according to a schedule. Policies that provide a flat percentage of the veterinarian’s bill offer the best coverage.

What does it exclude? As with any insurance policy, a pet insurance policy will have a list of exclusions. These can affect the value of coverage more than any other provision. Common exclusions include:

Breeds: Some policies exclude or charge higher premiums to cover certain breeds.

Hereditary conditions: Some policies exclude coverage for specified hereditary conditions. Some of these do not manifest until a pet is older, so a seemingly healthy young pet might need expensive surgery later.

Age limits: Some policies won’t cover animals younger than eight weeks old or over eight years old.

Pre-existing medical conditions: As with health insurance policies for humans, a “pre-existing medical condition” existed before coverage began. If a covered pet required treatment during the policy period, some insurers will automatically consider that condition pre-existing when the policy renews, effectively eliminating coverage for that condition. Other insurers offer lifetime continuous coverage—as long as the owner renews coverage, the insurer will not automatically disqualify claims for pre-existing conditions.
Please note that most pet health policies are written on a reimbursement basis: The insured pays the veterinarian’s bill and presents it to the insurer for reimbursement. A good insurer will provide reimbursement promptly.

Kirstin Losert, DVM, a practicing veterinarian in Massachusetts, recommends pet health insurance for most pet owners. “You might not use it some years, but if your pet needs emergency surgery, you could suddenly face a bill of $3,000. If insurance means the difference between being able to afford the surgery that keeps your pet alive and having to euthanize it, then it’s worth the price.”

When you are faced with high pet medical bills, pet insurance can help relieve some of the emotional and financial stress. For more information on voluntary pet insurance, please contact us.