Having Pet Insurance Doesn't Mean You Don't Need Savings. Here's Why

Bringing a pet into your life has the potential to be an expensive undertaking. And sometimes, the costs involved can be difficult to budget for ahead of time.

Rover, for example, puts the cost of owning a dog at $1,000 to $5,225 per year. But clearly, there's a huge difference between the lower end of that range and the higher end.

One of the reasons your pet ownership costs might come in higher than expected is if your pet encounters health issues. You may be able to budget for routine care, but it's harder to factor in the cost of emergency vet appointments and potential animal hospital stays.

That's why it's a good idea to put pet insurance in place. With a pet insurance policy, you're generally covered in the event of catastrophic medical bills that might otherwise drive you into debt.

But even if you buy a pet insurance policy for your animal, it's important to have money in savings at all times. Here's why.

You still have to fork over the money

With regular (human) health insurance, you usually present your insurance card at the time of an appointment, and, based on your policy, you're charged a percentage of your care under the assumption that your insurer will pay the rest. Pet insurance works differently, though.

With pet insurance, you generally have to pay for the cost of your pet's care upfront. From there, you'll need to submit a claim to your pet insurance company for reimbursement. In some cases, the facility that treats your pet might submit that claim on your behalf to spare you the work.

But either way, it's not like pet insurance kicks in right away so that you're not handing over the full cost of your pet's care. Usually, you are. And it could take weeks or even months to get reimbursed after filing a pet insurance claim. So it's important to have cash reserves so you can pay those initial bills without landing in debt.

Plus, you might assume that a given health issue your pet encounters is covered by your pet insurance, only to learn that it's not. So that's another reason to make sure you have some savings available.

Like human health insurance, your pet insurance policy might come with a deductible you need to pay before your pet's care is covered. So let's say your plan has a $400 deductible. If you encounter a $420 expense, you're basically paying for all of it in full even if you have coverage in place.

Finally, remember that even with pet insurance, you may be responsible for a portion of your pet's care. Let's say your policy pays for 90% of major surgeries. If the cost of one of those is $6,000, you're still going to have to shell out $600.

Always have savings on hand

Adopting a pet is a huge financial commitment. You need to make sure you're financially ready, and that means having money in the bank at the time of that adoption.

Along these lines, it's important to have savings available at all times as a pet owner. So one thing you may want to do is allocate a portion of your paycheck each month to a pet care savings fund. That way, you won't immediately have to stress when your pet gets sick and you have to shell out the money for its care.