What is pet insurance?

How does pet insurance work?

Pet insurance works by reimbursing pet owners for eligible veterinary expenses, helping manage the cost of care. Unlike human health insurance, pet insurance requires you to pay the bill upfront and then submit a claim. If the claim is approved, the company will reimburse you for a portion of the expenses.

Most pet insurance involves a straightforward process for managing costs: customers select a plan based on their pet’s needs and budget, pay a monthly premium to maintain coverage and file claims for veterinary visits or procedures. Costs, coverage and exclusions vary among providers, so it’s important to review policy details before signing anything.

Many providers accept claims online or through a mobile app, while others require submission via email or fax.

Most companies require documentation to approve claims, but the specific requirements vary by provider. For example, Lemonade Pet Insurance asks for an itemized receipt and vet notes. These records help verify the legitimacy of the treatment and ensure it aligns with your policy's terms.

Types of pet insurance coverage

There are three common types of pet insurance:

• Accident-only plans cover costs related to unexpected injuries, such as broken bones or swallowed objects.
• Comprehensive (accident and illness) plans include coverage for both accidents and illnesses, such as infections, cancer or chronic conditions.
• Wellness (preventative) coverage focuses on routine care, like vaccinations or flea and tick prevention.

What type of pet insurance coverage is available depends on which provider you choose. Many pet insurance providers only offer wellness coverage as an add-on to a standard plan.

Accident-only pet insurance plans

Accident-only pet insurance plans cover costs related to unexpected injuries, such as broken bones, swallowed objects or torn ligaments. These plans are often more affordable and appeal to pet parents with generally healthy pets who may be more accident-prone. Accident-only plans don’t cover illnesses, meaning treatments for conditions like cancer, infections or arthritis wouldn’t be eligible for reimbursement.

Accident and illness (comprehensive) pet insurance plans

Accident and illness plans provide more comprehensive coverage, helping with expenses related to both accidents and illnesses. This includes conditions like urinary tract infections, cancer, arthritis and ear infections, as well as diagnostic tests, surgeries, hospitalization and medications.

Some providers also include coverage for chronic, hereditary and congenital conditions, as well as behavioral issues and alternative therapies. While accident and illness plans offer broader protection, they often cost more than accident-only plans.

Wellness (preventative care) pet insurance plans

Wellness coverage focuses on routine and preventive care, such as vaccinations, flea and tick medication and annual wellness exams. Many providers offer wellness coverage as an optional add-on for an additional cost. While this type of coverage can help pet parents manage regular care expenses, it may not be as cost-effective for those whose pets only need minimal routine care.

Choosing the right type of coverage depends on your pet’s health, age, breed and your financial situation. Accident-only plans are best for low-risk pets, while accident and illness plans provide broader coverage.

Adding wellness coverage can help offset routine care costs if it fits your budget and meets your pet care goals. Always review all policy documents carefully to understand what the policy covers.

Pros and cons of pet insurance

Just like any product, pet insurance has both pros and cons. The following breakdown can help you determine if pet insurance is the right choice for you:

While pet insurance offers financial security for costly treatments, not all plans cover every type of care.

Common exclusions in pet insurance

All pet insurance comes with exclusions, which vary by provider. However, some exclusions are common among nearly all pet insurance plans. These include preexisting conditions, routine and preventative care, elective or cosmetic procedures and breeding-related expenses.

Preexisting conditions

Breeding-related costs, including pregnancy, whelping and associated treatments, are typically excluded from coverage. Procedures such as artificial insemination and cesarean sections are generally not eligible.

Elective or cosmetic procedures

Procedures like tail docking, ear cropping or declawing are generally not covered. Pet insurance focuses on medical treatment rather than cosmetic or optional surgeries. This exclusion may also apply to spaying and neutering under some policies.

Breeding-related expenses

Breeding-related costs, including pregnancy, whelping and associated treatments, are typically excluded from coverage. This includes procedures such as artificial insemination and births by cesarean section.

Other common exclusions

Illness or injury resulting from activities like racing, commercial guarding or organized fighting is unlikely to be covered. Pet insurance also typically excludes obedience training, boarding, grooming and behavioral therapy.

Choosing the right pet insurance plan

One of the things that makes choosing the right pet insurance plan difficult is that costs and benefits vary widely based on the following factors:

• Coverage options: Plans with broader coverage, like hereditary diseases or chronic illnesses, often cost more.
• Coverage limits and maximum payouts: Different plans have annual, per-incident and lifetime payout limits. Make sure the limits are high enough to cover potential expenses based on your pet’s breed and health history.
• Cost versus benefits: Balance the cost of the plan with the coverage it offers. A lower-cost plan might have fewer benefits or restrictive limits, while a more expensive plan may provide more comprehensive coverage.
• Reimbursement rate: Check the reimbursement percentage, which usually ranges from 70% to 90% of covered expenses after the deductible. Higher reimbursement rates mean lower out-of-pocket costs.
• Waiting periods and exclusions: Understand waiting periods before coverage kicks in and review exclusions like preexisting conditions or routine care.
• Customer reviews: Read customer reviews to assess how insurers handle claims, customer service and overall satisfaction.
• Identifying your pet’s needs: Consider your pet’s breed, age and health history. If you have a breed prone to specific conditions, look for plans that cover those issues and ensure the payout limits are sufficient.

» COMPARE: Best pet insurance companies

Pet insurance costs

Pet insurance costs vary widely, depending on a few key components. Understanding these factors can help you make an informed decision.

How much does pet insurance typically cost?

According to NAPHIA, the 2023 average annual premiums for pet insurance ranged from $116.11 to $675.61, depending on the type of coverage and whether the pet was a cat or a dog.

Sample pet insurance quote: Embrace Pet Insurance for a German shepherd

Here is an example from Embrace Pet Insurance for a one-year-old female German shepherd in San Diego, California. Notice how different factors such as annual limits, deductibles and reimbursement levels influence the cost of monthly premiums.

What factors influence the cost of pet insurance?

Here is a list of additional factors that influence the cost of pet insurance:

• Age and breed of your pet: Older pets often have higher premiums due to increased health risks. Certain breeds may also face higher costs if they’re predisposed to health issues.
• Type of coverage: Accident-only plans are more affordable than comprehensive plans, but they cover fewer situations. Add-ons for wellness care can also increase premiums.
• Deductibles and coverage limits: Higher deductibles typically lower your monthly premium, while lower deductibles raise it. Higher payout limits also increase premiums.
• Geographic location: Vet costs vary by region, which can influence premiums. Urban areas or regions with higher vet fees mean higher premiums.
• Preexisting conditions: Pets with preexisting conditions may face exclusions or higher premiums.

While this list doesn’t cover every possible factor, it offers a solid guide to help you understand the elements that influence your premium. By considering these details, you can make a more informed decision when selecting a pet insurance plan.

Is pet insurance worth it?

Pet insurance can be worth the investment for many pet owners, especially those with pets prone to health issues or those who face high veterinary costs. While premiums can range from $10 to $50 per month on average, insurance provides a financial safety net for unexpected expenses, such as surgeries or emergency treatments.

It’s not the right choice for everyone, though. Older pets or those with preexisting conditions often face higher premiums and limited coverage. In these cases, alternative strategies like savings accounts or financing programs might be more cost-effective.

To decide if pet insurance is worth it for your pet, consider their breed, age and health risks. For breeds predisposed to certain conditions, the financial relief can outweigh the cost of premiums.

Enrolling a pet early when they’re healthy helps lock in lower premiums and avoid coverage limitations. Ultimately, weigh the costs, benefits and your financial situation to determine if pet insurance is the right choice for you.