How does pet insurance work?

Pet insurance is a type of insurance policy that helps pet parents save on unexpected and often expensive veterinary care, such as surgeries, medications, and diagnostic tests. 

In 1988, just over half (56%) of American households had pets. Today, thanks partly to the recent pandemic, 70% of American families — over 90 million homes — own at least one pet. 

Notice that we’re using the term “own” here. That’s because although most of us consider our pets the heart of our families, they’re considered by law to be “personal property.” And while many of us think of pet insurance as health insurance for pets, it’s actually a type of property and casualty insurance, like auto, boat, and homeowner policies. 

How Pet Insurance Works

With a pet insurance policy, you pay a monthly premium to the insurance company. And when you take your pet to the vet, you pay their office directly. After payment is made, the pet owner (or sometimes the veterinarian’s office) submits a claim to the insurance company along with a copy of the invoice. If the treatment is eligible, a pre-determined portion of the cost, minus any deductibles or copayments, will be reimbursed. 

The amount reimbursed will depend on the insurance policy you select and, among other things, your pet’s breed, age, and health history. Some policy limitations may restrict coverage to what is deemed medically necessary and pay only a “reasonable cost,” usually less than what the vet charges for the treatment. 

What Pet Insurance Covers

In the past, pet insurance policies rarely covered routine or elective services, such as vaccinations, spaying, and neutering. Because the insured was an animal (personal property), policies only covered “accidental occurrences or injuries.” Today, however, many pet insurance policies provide comprehensive coverage for these more routine procedures. 

What Pet Insurance Does Not Cover 

You’ll want to understand the terms of any policy you’re considering to determine the extent of coverage you need versus what the insurer is offering to provide.  

Some standard pet insurance exclusions are the treatment of behavioral problems, hip dysplasia, cataracts, and dental care not associated with an accident or injury. Also, when renewing a pet insurance policy, which typically occurs every 12 months, the insurance provider may deny coverage for pre-existing or previously treated conditions. 

There are also cosmetic procedures, like declawing and docking (the surgical removal of a portion of the ears or tail), which are considered unnecessary and usually not covered by insurance. 

Breed-specific health issues are often not covered, so consider potential medical conditions associated with a breed when researching a policy. For example, basset hounds have chronic ear infections; if your policy doesn’t cover it, you’ll be paying those medical costs 100% out-of-pocket.

Types Of Pet Insurance Policies 

A variety of pet insurance policies are available, each with a different level of coverage. The most common types are: 

  1. Accident-only coverage provides coverage for injuries sustained in accidents, such as falls, auto collisions, or by ingesting foreign objects. It does not cover illnesses or preventive care. 
  2. Illness coverage covers the treatment of illnesses such as cancer, diabetes, or various infections. It does not provide coverage for accidents but may partially cover preventive care, such as vaccinations and routine checkups. 
  3. Comprehensive coverage provides the most complete range, including accidents, illnesses, and preventive care. Because it allows for more extensive coverage, it is also more expensive. 

What Does Pet Insurance Cost?

As mentioned above, you’ll be expected to pay a monthly premium to the insurance company. The amount of coverage and the cost of the premium will depend on the following:

  • the insurer you choose
  • the type of policy you purchase
  • the type of pet
  • the breed of the pet
  • the age of the pet
  • the level of coverage
  • and the amount of deductible selected 

In general, policies for younger pets will have lower premiums since they’re less likely to need medical care. And like other insurance policies, pet insurance has a limit (also referred to as a cap) on the amount the provider will pay on a claim. That amount may differ depending on whether the visit was for an emergency or illness or preventive or routine care. Some pet insurance providers cap the reimbursement for extensive surgeries and care when your pet reaches a certain age. Others will limit or even exclude coverage for ongoing conditions.

Advantages Of Pet Insurance

There are two significant benefits to consider when taking out a pet insurance policy.  

  • Pet insurance can save you money. Ask any pet parent what the most surprising part of pet ownership is, and they will probably mention the high cost of vet bills. Veterinary care is expensive, especially for complex conditions or emergency treatments, and an unexpected bill for hundreds or thousands of dollars can be something of a shock. With pet insurance, you can get help paying for these costs. 
  • Pet insurance can give you peace of mind. Another advantage of pet insurance is that it can give comfort in knowing that your pet will receive the best possible care, even if it’s pricey. With pet insurance, you won’t have to worry about whether you can afford to pay for your pet’s medical care. This can help you make decisions based on what’s best for your pet rather than what’s best for your bank account. 

Need Help Choosing Pet Insurance?

As you’ve read, pet insurance can be a valuable investment for pet parents. It can help you save on the cost of veterinary care and give you peace of mind knowing that your pet — like any family member — gets the care it needs. 

We can help you make the right choice. The Guided Solutions team can compare coverage and rates and help you find an insurance policy that’s right for you and your pet. 

Let’s get started.


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