3 Important Ways Pet Insurance Differs From Human Health Insurance

Pet owners buying coverage must make sure they know exactly how pet insurance works -- including the ways in which it differs from the health insurance humans get.

While both human and pet insurance coverage are meant to ensure that an illness doesn't empty out a bank account, the differences between the two types of policies could have a major financial impact.

Here are three big ways in which pets are not as well provided for by insurance, compared with people who get covered.

1. Pet insurers can exclude coverage for pre-existing conditions

If you buy human health insurance, it will pay for treatment of all medical conditions that the policy covers -- even if you had one of those conditions before you got your policy. An insurer also can't stop you from buying insurance even if you are already sick when you do it. Plus, the insurer can't charge you more if you have an illness before getting covered.

With pet insurance, that's definitely not the case. Insurers can and will deny all coverage for any pre-existing medical conditions your pet has. And some insurers define this broadly -- for example, denying all future problems related to digestive disorders if your pet's medical records show they were in for tummy trouble before you got covered.

While you can still buy a policy for a pet with a pre-existing condition, you need to be aware that coverage for related issues will be excluded. And, ideally, you should get coverage before your pet develops health problems to make sure these medical issues aren't excluded.

2. Pet owners usually have to pay the entire bill out of pocket and then request reimbursement

If you see your doctor and your insurance covers your care, you aren't going to have to pay the costs upfront and wait to get reimbursed when you have human health insurance. You'll probably have to pay a copay (depending on your insurance plan), but the doctor will bill your insurer and get the rest of their money from the insurance company.

If you have pet insurance, though, you will need to be prepared to pay the vet for care out of your bank account or use your credit cards when the care is received. It's then up to you to make a claim with your pet insurer for reimbursement.

This puts the responsibility on you, rather than the doctor's office, to submit info about the care to the insurer. It also means you may need to come up with a lot of money upfront for care and then wait to get it back, so be sure to choose a pet insurer that pays claims in a timely manner.

3. There are typically lifetime coverage limits for pet insurance

Your health insurer can't cut off coverage for most medical issues once you have spent a certain amount of money getting treated for them. There are no lifetime limits on how much care your human health insurance will pay for. That's not the case with pet insurance, as most insurers impose caps on coverage.

Being aware of these three big differences can help you better understand what pet insurance can do to help your finances and help ensure your companion animal's care is within reach.