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  • Writer's pictureHarry N. Stout

232- What is Pet Insurance? Protecting Your Furry Friends

I was recently asked by a subscriber to provide background and the basics about pet insurance. This can be a sensitive subject for many pet lovers. In this post, I have tried to provide a general product overview and look into how it is purchased.

We have insurance coverage for our homes, apartments, vehicles, our health and other valuable things in life. We buy these coverages to provide us with cash in the future to pay for the unexpected costs of accidents and acts of God. If you have a pet, you may want to consider protecting against the costs related to medical care. More and more people are looking into purchasing this coverage. Pets have medical emergencies too. For example, years ago when my kids were young, our family dog, Max, broke his leg and needed surgery. The cost was around $1,500 after we negotiated a cash price for the procedure. I have learned that things happen in life when you can least afford them.

If you are a pet owner and you don’t currently have pet insurance, you’re not alone. While around 67% of U.S. households own pets, just over 1% of those pets are insured, according to the North American Pet Health Insurance Association. But given the price of vet care, it’s worth looking into. The ASPCA estimates the annual cost of routine vet visits is $80-$250 for dogs and $110-$550 for cats depending on your pet’s age. Emergency vet visits can cost from $800-$1,500, and sometimes more.

How Does Pet Insurance Work?

Like human health insurance, pet insurance helps alleviate some of the costs of keeping your pet healthy. You can choose from different levels of coverage, with each plan costing a monthly or annual premium based on how much coverage you choose.

Types of Pet Medical Insurance

Some plans cover basic scenarios like accidents and injuries, some only cover accidents, and others include accidents, injuries and genetic/hereditary conditions. The more comprehensive the coverage, the higher you can expect the cost to be. Pet insurance is usually a year-long plan that you can renew every year. There are most times three options for coverage.

  1. Accident-only plans. Accident-only plans will be less expensive but won’t cover illness. For example, if your dog breaks a bone, an accident-only plan can cover medications and hospitalization.

  2. Accident and illness plans. About 98% of pet insurance plans are accident and illness plans, according to the National Association of Insurance Commissioners (NAIC). With a plan like this you’ll get coverage for problems such as: - Accidents - Hospitalization - Illnesses including cancer and hereditary and congenital conditions

  3. Wellness or routine care add-ons. Wellness plans cover preventive care for your pet and are typically offered as add-ons

What Does Pet Medical Insurance Cover?

When you purchase a comprehensive accident and illness pet insurance plan, it generally reimburses you for a wide array of health issues such as:

  • Accidents such as broken bones, torn ligaments and ingestion of toxins

  • Illnesses such as cancer, arthritis, ear infections and urinary tract infections

  • Hereditary and congenital conditions such as heart disease and hip dysplasia

  • Chronic conditions such as diabetes

  • Alternative therapies such as chiropractic care and acupuncture

  • Behavioral issues such as fur pulling, excesses licking or destructive chewing

  • Prescription foods, supplements and medications such as pain relievers, thyroid medications and inflammation reducers

  • Microchipping in case the pet gets lost

  • Option to add a wellness plan for expenses such as vaccines, dental cleanings and flea, tick and heartworm prevention

What Doesn’t Pet Medical Insurance Cover?

Some typical pet insurance exclusions usually include:

  • Pre-existing conditions. When a pet is diagnosed with or indicates signs of an illness or injury before coverage begins, pet insurance generally won’t cover it.

  • Preventive or elective procedures. Plans won’t cover preventive or elective procedures such as nail trimming or ear cropping.

  • Exam fees. Some insurance companies exclude vet exam fees from coverage, even if the fee is for an accident or illness-related visit.

  • Grooming

  • Breeding costs

  • Expenses not related to veterinarian care. This includes expenses such as taxes or administrative fees charged by the vet.

  • Food and vitamins

How Pet Insurance Rates Are Determined

There are several factors insurers commonly use to price pet insurance policies, including:

  • Type of animal and breed: Whether you’re ensuring a dog or cat will impact the premium.

  • Age: As your pet ages, your insurance cost will increase.

  • Gender: Insurers have found that male pets usually have a higher number of claims than females, so some use gender in pricing.

  • Location: Veterinarian costs vary around the country, so your geographic area will impact the cost of pet insurance.

  • Policy: The particulars of the policy will affect your rate, such as:

  • Deductible

  • Reimbursement percentage

  • Maximum annual coverage

How Much Does Pet Insurance Cost?

According to the North American Pet Health Insurance Association, the average premiums for 2020 were:

2020 Average Premiums (U.S.)

Policy Type

A&I – Accident & Illness: Accident benefits plus illnesses such as cancer, infections, digestive problems, etc.

AO – Accident Only: Foreign body ingestion, lacerations, motor vehicle accident, ligament tears, poisoning, etc.

As you can see, depending on the type of policy purchased, you can spend several hundred dollars per year for coverage.

How to Compare and Buy Policies

You can easily find pet insurance online by visiting a number of comparison-shopping sites. You’ll also see pet insurance sold through pet stores, shelters, animal rescue organizations, veterinary offices and, recently, offered through your employer as part of a benefits package.

To find a pet insurance policy, compare pet insurance quotes from a few companies. Make sure you’re comparing prices for the same level of coverage as much as possible (deductible, reimbursement percentage and maximum annual coverage). This can be difficult because not all pet insurance plans offer the same payout options and benefits.

Questions to Ask Before Buying Pet Medical Insurance

Like any insurance product, you’ll want to know what you’re buying so that you don’t waste your money or have unpleasant surprises if you need to make a claim. Consider these questions when buying pet insurance:

  • Is reimbursement calculated based on the actual vet bill, a benefits schedule for specific conditions or “usual and customary” vet rates?

  • Is the deductible for each year or each incident?

  • Can you choose any veterinarian?

  • Can the vet be paid directly, or will you pay the vet and get reimbursement?

  • How long will reimbursement take?

  • Does the policy cover wellness, or can you add wellness coverage?

  • Are pet prescriptions covered?

  • Are there end-of-life benefits such as euthanasia and/or cremation?

Other Considerations

Whether or not you opt for pet insurance, you should have a portion of your emergency fund dedicated for vet care to make sure you can handle unexpected out-of-pocket costs. As we have seen, many plans have a deductible, a certain amount you must pay out of pocket before coverage kicks in. Depending on your policy, this could be anywhere from $0-$2,500 in a plan year. While most all human health insurance works on a copay basis (you pay a certain percentage when you see the doctor and the insurance covers the rest), pet insurance is largely a matter of reimbursement. You will need the cash to pay the vet bill and wait for reimbursement from the pet insurance company.


No matter how much you guard your pet against accidents and sickness, keeping a pet healthy can be expensive. If the prospect of a large surprise vet bill worries you, pet insurance is a solution.

Just like other forms of insurance coverage you need to have a basic understanding of pet insurance products before you begin shopping and make a purchase. With pet medical costs continuing to increase, buying pet insurance may be an effective way to protect your household against unexpected pet related medical bills.


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