Can a Large Emergency Fund Take the Place of Pet Insurance?

When you adopt a pet, you commit to caring for a living creature for what could be many years. And like it or not, your pet could put a big strain on your finances, between paying for food, supplies, and healthcare.

You'll often hear that having pet insurance is essential to cover the latter. Without pet insurance, you might conceivably have to shell out thousands of dollars if your pet is injured or falls ill and needs extensive treatment.

But what if you have a lot of money in your savings account? Can your emergency fund take the place of a pet insurance policy?

Having coverage could benefit you even if you have money in the bank

The purpose of having pet insurance is to help ensure that you're able to cover your pet's medical needs without resorting to debt -- that, and to make sure that you're not forced to forgo life-saving treatment for your pet due to a lack of funds. So if you're sitting on a really robust emergency fund, you might assume that you can skip getting pet insurance.

Let's imagine your pet ends up needing a $7,000 surgery. Seeing as how 63% of Americans don't have the cash reserves to cover an unplanned $500 expense, according to recent SecureSave data, the typical pet owner might end up in a serious jam in that situation without insurance in place.

But what if you happen to have a $15,000 emergency fund? You could, in that case, dip in to cover that surgery and still have about half of your savings left over.

Now, it's true that if you have a nice amount of savings, you may technically be able to get away with not having pet insurance. But one thing you should realize is that your pet might encounter several expensive issues in a relatively short period. And without insurance, you risk depleting your savings, thereby leaving yourself with inadequate funds to cover a non-pet-related emergency.

So going back to our example, let's say your pet needs a $7,000 surgery, and then six months later falls ill and winds up in the hospital with a $5,000 bill. Suddenly, your $15,000 emergency fund is whittled down to $3,000. If you then, shortly thereafter, have to replace your home's heater for $5,000, you won't have enough funds to cover it.

It pays to shop around for pet insurance

Even if you buy pet insurance, it's still important to have a nice savings cushion to cover the cost of your pet's care. A policy generally won't pick up 100% of the tab when you face medical bills -- pet insurance works by partially reimbursing pet owners after they pay for care (depending on your coverage). So you might have to shell out the money yourself and wait to be paid back.

But don't just fall back on your savings in the absence of pet insurance when a policy may end up being more affordable than expected. Progressive says the average cost of pet insurance covering accidents and illnesses for a dog is $508 per year. For a cat, it's $302.

This isn't to say that your costs won't be higher. But they might be lower. If you shop around, you can compare rates with the best pet insurance companies and see which policy makes the most sense for you.

All told, it's good to have savings when you have a pet. Heck, it's good to have savings in general. But don't assume that having savings means you don't need pet insurance.

You no doubt worked hard to build up those cash reserves. And you shouldn't leave yourself vulnerable to having them wiped out when coverage for your pet may be more affordable than you'd think.