What Does Pet Insurance Cover?

Many households include pets as a part of their families. A majority of households in the United States own a pet, and we spent an estimated $32.3 billion on vet care and products in 2021. As people spend more money on their pets, purchasing pet insurance is also on the rise.

Pet insurance has been available in other countries since the early 1900s. However, it was not until 1982 that the United States issued its first pet insurance policy. TV star collie Lassie was the recipient.

The average cost of emergency veterinary surgery for dogs and cats can run between $1,500 to $5,000. With four out of five pet owners unable to afford a $5,000 vet bill, pet insurance can be an affordable way to help defray these costs. But what does pet insurance cover, and is it worth the cost?

What does pet insurance cover?

Pet insurance typically covers pets for accidents, injuries, and illnesses. Regular vet check-ups, vaccines, preventive medications, and other routine care are expected during the life of a pet. These costs can be budgeted for, so they are not typically included in coverage unless added as an additional rider. Pet insurance is most appropriate for helping with unexpected costs, such as vet care resulting from an accident, injury, or illness.

Pet insurance can help offset some of the healthcare costs associated with a pet. There are different pet insurance plans based on the pet, the type of coverage, and the insurance company.

Currently, the pet insurance market in North America consists of approximately 25 companies. Some of these companies also market and/or underwrite multiple white label or co-branded products, thus encompassing at least 20 additional pet insurance brands. In 2022, close to 3.9 million dogs and close to one million cats were insured. This is nearly double the number of pets insured in 2019.

Depending on the plan, pet insurance policies can cover:

• Accidents
• Surgeries
• Prescriptions
• Emergencies
• Illnesses
• X-rays
• Hospitalizations
• Wellness checks
• Dental illnesses

Types of coverage

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

Although most insurers offer the three types of coverage, each insurer will have differences within each plan, so it is important to shop around to compare plans.

• Accident-only (AO) policies offer limited coverage. It does not cover most illnesses. It is cheaper than comprehensive coverage and is typically best for emergencies:
  • Accidents such as car accidents
  • Foreign body ingestion (swallowed objects)
  • Lacerations
  • Poisoning
  • Ligament tears
• Accident and illness (A&I) policies are also known as "comprehensive policies" since they cover accidents plus minor and major illnesses:
  • Accidents
  • Injuries
  • Chronic illnesses (such as cancer, infection, and digestive problems)
  • Infections
  • Diagnostic testing
  • Prescription drugs
  • Emergency care
• Wellness policies cover routine and preventive care, such as annual check-ups, vaccinations, and teeth cleaning. These policies tend to be riders to A&I policies. If embedded with an A&I policy, they may include:
  • Vaccinations
  • Early screening diagnostics
  • Dental care
  • Consultations for proper nutrition

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 endorsements 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 no limits at all. 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%. A reimbursement percentage is the portion of the vet bill you'll get back from the pet insurance company after the deductible is paid. For example, if a pet owner has an 80% reimbursement percentage, the pet owner will pay the remaining copay out of pocket.
• Annual deductible amounts: Pet owners can choose their annual deductible amount. They can range from $100 to $500. The higher the deductible, the lower the premium amount. The annual deductible is the amount a pet owner is responsible for before reimbursements start.

What to look for in a pet insurance provider

When looking for pet insurance, pet owners should consider several factors.

• Cost and coverage: Pet owners should choose the policy that gives the best value based on their budget. Although pets are considered property, most pet owners see their beloved pets as family members. A good policy can provide peace of mind in case a pet experiences an unexpected injury or illness.
• Reputation and stability: Pet owners should choose an insurer that has experience and knows what it's doing when it comes to providing pet insurance. Read reviews and research how long an insurer has been in business.
• Claims process: Pet owners want an insurer that makes it easy to submit a claim. Since most plans require pet owners to pay the entire bill out of pocket before getting reimbursed, it is important that claims are promptly paid.

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.

Accident-only average premiums

• Dog
  • Annual: $200.52
  • Monthly: $16.70
• Cat
  • Annual: $122.19
  • Monthly: $10.18

Accident and illness average premiums

• Dog
  • Annual: $640.04
  • Monthly: $53.34
• Cat
  • Annual: $387.01
  • Monthly: $32.25

Accident and illness average premiums

• Dog
  • Annual: $1,134.29
  • Monthly: $94.52
• Cat
  • Annual: $613.67
  • Monthly: $51.14

Wellness coverage typically costs $20–$25 per month and is rolled into comprehensive coverage policies. Wellness plans may include vaccinations, early screening diagnostics, consultations for proper nutrition, dental care, etc. 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.

In 2022, the total pet insurance premiums paid in the U.S. was $3.2 billion, up 25% from the year prior and up more than 150% from 2018.

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 can cost $800 to $1,500 per night. One trip to the emergency room for a dog would be worth the $600 average annual premium. In addition to offsetting financial costs, pet insurance can provide you peace of mind for a beloved member of your family.

The best pet insurance can save you thousands of dollars a year on emergency treatment and prescription medication. Since it doesn't automatically cover preventive care, it is important that pet owners ensure their pets are eating a healthy diet, exercising regularly, and not skipping annual wellness checks.

Most pet insurance policies do not cover pre-existing conditions. So the earlier you cover your pet, the greater chance you have of covering chronic illnesses that may develop later in life. Especially for major illnesses, a pet insurance plan can cover the total premiums paid over the life of your pet. To find the best pet insurance company for you, get quotes from several pet insurers and compare costs and coverages.

What is not covered by pet insurance?

Since pets are considered property, there are more restrictions and exclusions than healthcare insurance for humans. Exclusions are based on the type of plan. It is important to understand and review what a pet insurance plan will not cover. Here are the most common exclusions.

Pre-existing conditions

Any medical condition that a pet has before the policy starts is subject to exclusion. Some pet insurance companies review the past 24 months or a pet's entire life to establish pre-existing conditions. This also includes hereditary disorders. Some plans do not cover certain breeds due to the fact they are predisposed to certain medical conditions.

Wellness care and preventive diseases

Most plans have a rider that offers preventive care. If not included, however, pet owners will have to pay for routine veterinary care out of pocket. If pets get sick due to pet owners not vaccinating their pets, then treatments will likely not be covered.

Elective procedures

Most policies do not cover cosmetic surgeries or expenses not directly related to veterinary care. This typically covers tail docking, ear cropping, nail trimming, and cosmetic dental restoration for teeth such as veneers and crowns.

Bilateral conditions

A bilateral condition is a condition or disease that affects both sides of the body. If pets have a problem with parts of their knees, hips, and other conditions that can impact both sides of a pet's body, then they are not covered. Because a pet runs a higher risk of the same condition on the other side of the body, if a pet has a pre-existing instance of a bilateral condition, the other side is typically not covered. Certain policies restrict the condition to just the first year. So if the problems arise after 12 months, then they will be covered.

Pregnancy and/or birth

Pet owners typically have to pay for costs related to pregnancy, breeding, or whelping. 

Injuries that are deliberate or due to neglect

Insurance companies won't cover deliberate injuries by a pet owner or anyone in the household. Injury and illnesses from fighting, racing, cruelty, or neglect are also not covered.

Waiting period

Most pet insurance policies have a traditional waiting period of two weeks. Some injuries, like bilateral problems, have other specific time periods.

Does coverage differ by type of pet?

Pet health insurance is available for all types of pets. They include common animals, such as dogs, cats, and rabbits, as well as uncommon pets, such as ferrets, exotic birds, and various rodents.

Certain breeds may be more expensive to cover since they are more expensive to care for. Check with the insurance company to see if your pet is covered. Some insurers will cover certain exotic pets while others will not.

Pet owners spend nearly $4,500 a year on care for their pets. This amount is 61% higher than what they expected the costs to be. Having the right type of pet insurance can help offset these high costs.