Considering Pet Insurance? Read This First

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Every year we see an increasing number of patients with pet health insurance.  Pet insurance is becoming an increasingly popular way to plan for emergency veterinary medical bills.  Almost unheard of just a few years ago, pet insurance is now a $1 billion per year industry.  The question is: Is it worth it?  Is it wise?

Well, in 1982, there was only one dog and cat insurance company in America.  Today, there are more than 80 different companies offering endless pet insurance products.  Pet insurance is already a billion-dollar industry, and experts expect it to continue growing 15 percent per year.  Consumer awareness is growing, making pet insurance more popular and more affordable — and more complicated.  Like any insurance product, there are endless varieties of plans, companies and features.  It can all seem overwhelming, but it’s important to understand the basic structure of pet insurance plans and the options.

Plans generally fall into two categories.  First are accident-only plans.  These are the most basic types of pet insurance plans, intended to cover injuries caused by an accident — for example, if your dog is hit by a car or breaks her leg.  These plans don’t cover illnesses or chronic conditions.  I do not recommend these plans.

I do recommend comprehensive pet health insurance plans.  They come in many varieties and can be endlessly customized.  They generally cover accidental injury, illnesses and chronic conditions.  Comprehensive plans are the most popular by far.  In fact, more than 80 percent of all plans sold in the US are comprehensive plans.  

Pet insurance plans, like all insurance plans, can have a wide range of confusing terms and conditions.  It’s important that you understand the terms of your plan so that there will be no surprises when it comes time to make a claim.  This is especially important because the majority of pet insurance plans are reimbursement plans.  This means that you still need to come up with the money to pay your vet bills in advance, and then submit your claim to the insurance company for reimbursement.  If they decline your claim, you are still responsible for the vet bills.

It’s also important to understand how the reimbursement amount for your plan is calculated.  Some plans calculate your reimbursement as a flat percentage of your costs after your deductible.  Other plans use the “usual and customary costs” for your area to determine the payout amount, regardless of how much you actually paid.  Plans typically have an annual cap to the amount of claims they will pay out per pet.  Some providers let you choose the amount of your maximum (for example, $5,000, $10,000 or $15,000), but more coverage comes at a cost and the higher the maximum annual cap is, the higher your premiums will be. 

Like all other insurance, there are deductibles and premiums.  Typically, the lower your deductible (the amount you have to pay out of pocket), the higher your premiums.  There are monthly payment plans, and sometimes you can get discounted rates by paying the full year’s premium in advance.  

Premiums are based on a number of factors, including the breed, age and health of your dog, and the type of plan you choose.  This is because some breeds are more prone to certain health conditions. Golden Retrievers and other large breeds are prone to joint problems like hip dysplasia and arthritis. Hounds and bulldogs can be plagued by eye and ear problems due to their floppy skin. Expect to pay more for coverage for pure-breeds, or face exclusions for certain breed-specific conditions.

Also, the older your dog is, the higher your premiums are likely to be because they are more likely to experience health issues and to have already had some past health problems.

The average cost of pet insurance for a dog is $45 per month, but it can vary widely from dog to dog. Plans can be as low as $10 per month and has high as $100 per month or more. It’s important to understand the terms of your plan and shop around for the best coverage and rate.

Once you know what type of coverage you want, you’ll have many decisions to make that can influence your overall cost and coverage. How high of a deductible are you willing to pay? What percentage of expenses do you want covered after the deductible? What will your annual coverage maximum be?  Be realistic about the amount of coverage you need — there’s no reason to buy more insurance than you need.

Then, be sure you completely understand the terms of your contract before you commit.  What illnesses, injuries and treatments are covered?  Are there any exclusions based on pre-existing conditions or your dog’s breed?  Do you have the choice of vets, or do you need to work with certain approved providers?  How is the amount of your reimbursement calculated?  Is it a flat percentage, or based on “usual and customary” rates? How are those “usual and customary” rates determined? How long is your insurance in effect and how and why the contract may be terminated?

In summary, I strongly recommend pet heath insurance.  Plans that accident and illness are the most important.  We call this catastrophic insurance, as most pet owners want to be covered for the major problems that provide the greatest out of pocket expense.  Those that include vaccines and routine care may not be worth the additional expense.

 Dr. Lamb is the Veterinarian at the Manchester Animal Hospital.

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