Pet Insurance: Navigating a Slew of (Important) Questions


Every year we see an increasing number of patients with pet health insurance at the Manchester Animal Hospital. 

The common question is, “Is it worth it?”

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.  In the following column, I will delineate the different forms of Pet Life Insurance and commit to advising that Pet Health Insurance is a wise decision.

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.  As I mentioned above, pet insurance is already a billion-dollar industry, and experts expect it to grow 15% per year.  Why?  Well, 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 seem overwhelming, but it is important to understand the basic structure of pet insurance plans and the options available before you make a decision.

There are countless different types of plans for you to choose from, but they generally fall into two categories: accident-only plans and comprehensive plans. 

Accident only plans are the most basic types of pet insurance plans, and they are intended to cover injuries caused by (as the name suggests) an accident.  For example, if your dog is hit by a car or breaks her leg, you are covered.  But these plans do not cover illnesses or chronic conditions.  I do not recommend these plans.

I 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 and more than 80% 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 most 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.  And, 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 deductibles.  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.

You will also—as is the case with all human health insurance plans—have different choices for your deductible and premiums.  As with your own insurance, typically the lower your deductible (the amount you have to pay out of pocket), the higher your premiums.  Providers typically offer both annual and monthly payment plans, and they sometimes even offer discounted rates when you pay the full year’s premium in advance.  The premiums you will pay for pet insurance will depend on several factors, including the breed, age and health of your dog, and the type of plan you choose.

Now, keep in mind, depending on your dog’s breed, you may pay a premium for coverage.  Why?  Well, 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.

Another factor to keep in mind when thinking about pet insurance is the age of your pet.  For instance, the older your dog is, the higher your premiums are likely to be.  Why?  Well, older dogs are more likely to experience health issues, and more likely to have already had some past health problems.  Expect to pay more for older dogs.

So, what does pet insurance typically cost?  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.  In my experience, the average cost of pet insurance for a dog is $45 per month, but it can vary widely from dog to dog. 

Once you know what type of coverage you want, you’ll have many decisions to make that can influence your overall cost and coverage.  As I suggested above, how high of a deductible are you willing to pay is really where you’ll start when deciding on insurance that’s right for you and your pet.  The less you have the pay out of pocket, the higher your premiums will be.  Other questions to address include what percentage of expenses do you want covered after the deductible.  After all, a higher reimbursement rate means higher premiums.  

Then, there is the issue of what your annual coverage maximum will be.  Similarly to the dynamic that kicks in with deductibles, it’s a give-and-take equation.  The higher the maximum, the more you’ll pay in annual premiums.  Be realistic about the amount of coverage you need–there’s no reason to buy more insurance than you need.

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?  Be sure to be honest on your application to avoid problems at claim time. I recommend researching the plans available online.

It is important to have the following questions answered:  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?  Also be sure to review the basic contract terms.  Learn how long it’s in effect, how and why the contract may be terminated, if there are any cancellation fees, and when and how the provider can change premiums, fees and terms.

In the end, yes, I strongly recommend pet health insurance to my patients.  Of course, the plans that cover 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.  But if you’re interested in expanded coverage, it can be the difference between peace of mind and worrying that the next health event in your pet’s life will be “the one” that kicks you into a bigger expense than you expect.

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