Guide to Pet Insurance

According to the American Pet Products Association's (APPA) National Pet Owners Survey, 70% of households in the U.S. own a pet and will spend an estimated $32.3 billion on vet care and products. As people spend more money on their pets, purchasing pet insurance is also on the rise.

What is pet insurance?

Currently there are 3.45 million pets insured in North America. Pet health insurance has been increasing at an average annual growth rate of 23.4% over the past five years. The cost of veterinary care has also increased as pets are now living longer. To help offset these costs, pet insurance can help manage preventative care, pay for illness treatment, and cover emergency veterinary costs for their pets.

Who is pet insurance for?

Pet insurance is for pet owners who want an insurance policy that will help offset veterinary bills should your pet become sick or injured. There are different types of pet insurance policies to choose from. Some are more comprehensive and will cover both minor and major veterinary procedures.

Emergency treatment for pets can be expensive. The average cost of emergency veterinary surgery for dogs and cats can run between $1,500 to $5,000. One study shows that only 1 out of 5 pet owners would be able to afford a $5,000 vet bill. If you are worried about the rising cost of pet care, then pet insurance can help defray these costs.

If you are financially able to pay for high medical care costs for your pet, you may not need pet insurance. However, if you are not in a position to pay thousands of dollars for unexpected pet care expenses, then you should consider taking out a pet insurance policy.

What are the basic components of a pet insurance policy?

Pet insurance is similar to health insurance for humans. They both include annual premiums, deductibles, annual limits, and copays.

Pet insurance coverage types

There are three basic components of pet insurance: accident-only, accident and illness, and wellness coverages. Each level determines the type of care covered as well as the cost.

• Accident Only (AO) policies only cover accidents such as car accidents, foreign body ingestion, lacerations, poisoning, and ligament tears.
• Accident and Illness (A&I) policies are also known as "comprehensive policies," since they cover accidents plus minor and major illnesses such as cancer, infection, and digestive problems.
• Wellness policies cover routine and preventative care such as annual check-ups, vaccinations, and routine dental care. These policies tend to be riders to A&I policies.

Pet insurance plan customizations

Insurance companies offer additional coverage options such as emergency treatment overseas and liability coverage for injuries caused by a pet. In addition to the different riders pet owners can add to the policy, pet owners have other ways to customize their plans.

• Annual limit: Plans typically have an annual limit ranging from $5,000 to $20,000. Some plans offer even higher amounts, to include unlimited limits. These policies, however, cost significantly more.
• Reimbursement percentage: Pet owners can customize how much reimbursement they receive for covered veterinary costs. Reimbursement amounts can range from 70% to 90%.
• Annual deductible amounts: Pet owners can choose the annual deductible amounts. They can range from $100 to $500. The higher the deductible, the lower the premium amount.

How expensive is pet insurance?

The cost of pet insurance depends on many variables, such as the type of pet, breed, sex, age, location, the different types of coverages, and the deductible. According to the North American Pet Health Insurance Association, the average premiums vary based on the type of policy.

Accident only average premiums

• Dog
  • Annual: $218.13
  • Monthly: $18.17
• Cat
  • Annual: $133.61
  • Monthly: $11.13

Accident and illness average premiums

• Dog
  • Annual: $594.15
  • Monthly: $49.51
• Cat
  • Annual: $341.81
  • Monthly: $28.48

Wellness coverage typically costs $20-$25 per month and is rolled into comprehensive coverage policies. For most people, the cost of these policies are what they would pay out of pocket anyway, so it may not be worth getting a standalone wellness plan.

Is there different insurance for different types of pets?

Pet health insurance is available for all types of pets. They include common animals such as dogs, cats, and rabbits, as well as less common pets including ferrets, exotic birds, and various rodents. Some pet insurance companies only cover dogs and cats, so it's best to shop around and verify if an insurer will cover a rare or exotic animal.

Is pet insurance worth it?

If your pet develops chronic illnesses later in life, then a pet insurance policy can be well worth the cost. Hospitalizations for pets can cost $800 to $1,500 per night. One trip to the emergency room for a dog is well worth the $600 average annual premium. Pet insurance can save you thousands of dollars a year on emergency treatment and prescription medications.

Since it doesn't cover preventative care, it is important that pet owners ensure their pets are eating a healthy diet, exercising regularly, and not skipping annual wellness checks. In addition to offsetting some of your financial costs, pet insurance can provide you peace of mind that a beloved member of your family will get the medical care they need.