4 Downsides of Pet Insurance

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KEY POINTS

  • Pet insurance provides important protection for animal companions, but there are still limitations on what pet insurance can do.
  • You'll often pay up front and get reimbursed later, and premiums can go up over time.
  • Pre-existing conditions won't be covered, and there may be a yearly or lifetime cap on coverage.


Don't expect too much from a pet insurance policy.

Pet insurance is one of the most important purchases an animal owner can make because it enables them to make care decisions based on what's best for their companion and not based on what they can afford. But while it's a good idea to get a policy ASAP, it's also essential to understand -- and plan for -- some of the downsides of pet insurance coverage.

In particular, here are four disadvantages of pet insurance policies that animal owners need to be aware of.

1. You'll usually have to pay for care out-of-pocket and wait for reimbursement

With most pet insurance policies, veterinarians will not bill the insurer and will instead expect upfront payment at the time of service. This means animal owners will need to pay out hundreds or even thousands of dollars for care and wait for their insurer to reimburse them.

While this can create a financial burden in the short term, the reality is that it's better to pay out the money and be reimbursed than to get stuck with the bills entirely, which is what would happen if no insurance coverage was in place.

Owners can mitigate this downside by making sure they have an emergency fund saved up to cover pet care costs until reimbursement comes through (or by having a credit card with enough credit free to charge the care). And many insurers allow for pre-approval, so owners won't have to worry about paying for expensive care only to find out after the fact that they won't get their money back.

2. There may be lifetime or annual limits on coverage

Many pet insurance policies set either an annual or a lifetime limit on how much care they will cover. This is different from human insurance, as Obamacare eliminated lifetime coverage limits.

Pet owners need to be aware of the fact that if their animal's care becomes very expensive, it may not always be fully covered. Owners should also shop around for a policy with high limits or, if they are willing to pay more, for one that doesn't impose a cap on what it will pay out.

3. Pre-existing conditions aren't paid for

Another big downside to pet insurance is that no pre-existing conditions will be covered. This is also different from human health insurance, as human insurers are not allowed to deny coverage for pre-existing medical problems.

A pet can still get insurance with a pre-existing health issue, but the insurer simply will not pay for any care related to that physical problem. Owners can also avoid exclusions by getting a policy in place as soon as possible when their animal companion is still young and healthy.

4. Premiums can go up over time

Finally, pet owners should be aware that even if an insurer guarantees it will not cancel coverage from one year to the next, this does not mean that premiums won't go up. Many pet insurance policies become more expensive over time. Of course, since costlier medical issues are more likely to develop in aging pets, these higher premiums are typically still worth paying.

When pet owners are aware of these disadvantages, they can make sure to plan for them -- and can potentially even avoid some of them by getting covered right away and shopping carefully for the best policy that works for their needs.

Our Research Expert

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