How Pet Insurance Works: Your Essential Guide
Licensed Insurance Producer - Pawlicy Advisor
Are you considering pet insurance but feel overwhelmed by all the information out there? With the rising costs of vet bills, it's no surprise that more pet owners are turning to this valuable protection plan to safeguard their furry friends' health while keeping their finances in check.
In this comprehensive guide, we'll explain what pet insurance is and reveal exactly how it works. We'll cover the types of policies available, identify common exclusions to watch out for, and offer tips on choosing the right plan. Let's dive in from the top.
What is pet insurance?
Pet insurance is a type of insurance policy that can help pet owners pay for the cost of veterinary care if their pet becomes sick or injured. Also known as pet health insurance or pet medical insurance, these policies provide financial security and peace of mind by limiting pet owners' financial risk caused by unexpected vet bills.
Since 2018, the total number of insured pets in the United States has grown at an average rate of 22.5% year-over-year as more and more pet owners seek solutions to manage the rising cost of vet care.1 Prices in the veterinary service sector have outpaced inflation over the past decade, spiking by as much as 11.4% between June 2022 and June 2023, according to the Consumer Price Index.2
Pet insurance can provide valuable financial security for future visits to the emergency vet — which costs between $800 and $1,500 on average but can easily add up to $5,000 or more. Such an expensive and unexpected bill can present a significant financial burden for many pet parents, forcing them to question whether they can afford their pet's critical care.
1/3 pets
will require emergency care each year
While it's difficult to imagine your four-legged family member in such a scenario, the unfortunate reality is that one-in-three pets will need emergency medical treatment throughout their lifetime.
Even regular vet visits can be difficult to afford given the recent economic inflation, with the U.S. Bureau of Labor Statistics reporting a 10% spike in price from 2022 to 2023.
Pet insurance can provide valuable peace of mind by knowing if your beloved companion ever gets sick or injured, the cost of treatment will never stand in the way of their access to care.
How does pet insurance work?
Pet insurance can help save pet owners money on veterinary care by reimbursing a portion of their eligible expenses. While every policy is different, this is how pet insurance works in most cases:
- Go to any licensed vet or animal hospital whenever your pet is sick or injured, knowing your out-of-pocket costs will be limited with insurance coverage. Pay the vet bill during your visit at the time of service.
- Submit a claim to your insurance company by mail, app, or online internet browser. Some pet insurance companies may require paperwork or a medical history review to process your claim, so be sure to save all receipts and documentation you receive from your vet appointment.
- Get reimbursed for 70% to 100% of covered expenses (after your deductible is met). On average, policyholders get reimbursed within 5 to 9 days after submitting a claim.
Most pet health insurance plans will reimburse you, the policyholder, rather than pay the vet directly. This means you don't have to worry about finding an "in-network" vet and can benefit from your coverage at any licensed vet clinic or animal hospital in the U.S.
💡 NOTE: Some providers, like Pets Best, offer the ability to pay the vet directly.
What does pet insurance cover?
Your policy will outline which conditions/expenses are covered, your reimbursment rate, your deductible, and the maximum payout (or annual limit).
No pet insurance company will cover a pre-existing condition, so it's important to enroll before any issues arise.
What Does "Deductible", "Reimbursement Rate", and "Limits" Mean?
Insurance terms can be confusing, but they're important to understand so that you can compare coverage and costs properly.
The deductible is the portion of the veterinary bill you’re responsible for before your plan’s reimbursement kicks in. Most pet insurance companies use an annual deductible. Some insurance companies offer a per-incident deductible, meaning if the same injury occurs more than once in future years, the deductible will no longer apply.
Reimbursement Rate is the amount a pet insurance company pays you back for the cost of care. The most comprehensive pet health coverage will reimburse 80% to 100% of your total vet bill (after your deductible is met).
Limits are something you should consider when choosing a plan, especially as you anticipate how much and what type of care your pets might need for their ages and conditions:
- Per-incident limits cap how much you can be reimbursed for a single illness or accident. If exam fees, surgery, lab tests, medications, and follow-up care total $5,000 and your limit is $2,000, you are responsible for over half of the bill.
- Annual limits cap how much you can reimbursed within a 12-month period. Once you hit your plan’s annual reimbursement limit, you are responsible for paying until your coverage resets for the year.
Finally, your premium is the fee you must pay each month (or year) to keep your insurance policy active. A higher monthly premium typically means you’re paying for more coverage, so you shouldn’t always go for the plan that has the lowest premium. Still, a plan with a low premium might be your best option if you’re on a tight budget.
💡 PRO TIP: If you need to save on monthly costs (your premium), you customize your plan and lower the reimbursement rate, lower the limit, or raise the deductible.
🧡 RESOURCE:
What Does Pet Insurance Actually Cover?
The best pet insurance plans can provide substantial coverage for the most expensive health treatment and diagnostics.
However, depending on your insurance plan, your policy may not cover every condition/expense your pet has. This is why it's so important to find a plan that covers your pet's breed-specific health risks.
Pet Insurance Can Cover:
- Unexpected injuries/accidents (like foreign object injestion, broken bones, and more)
- Unexpected illnesses (like cancer, gluacoma, hip dysplasia, parvovirus, and more)
- Surgery (like cruciate ligament tears, cataracts, and more)
- Medication
- Tests/diagnostics (like x-rays, blood tests, MRIs, and more)
- Emergency exam fees
In general, most pet insurance plans will cover expenses in the above categories as long as they are not related to a pre-existing condition. The details will depend on the type of coverage (see the chart below) and the provider you choose.
Some Pet Insurance Plans Also Cover:
- Alternative therapies
- Behavioral modification
- Hospital boarding
- Lost pet advertising/reward
- Nursing/Whelping
- Chiropractic
- Acupuncture
- Hydrotherapy
Pet Insurance Does Not Cover:
- Pre-existing conditions
- Routine care/Wellness exams
- Preventative care
- Spay/Neuter
- Vaccinations
- Exclusions
💡 NOTE: Although no pet insurance providers cover pre-existing conditions, some providers will cover curable conditions after a certain waiting period with no recurring symptoms. Also, pets with a pre-existing condition are still eligible for insurance, their coverage would only exclude the specific condition that already exists.
Types of Coverage [Chart]
Generally, there are three types of coverage: accident-only plans, accident-illness plans, and accident-illness plans with wellness coverage:
Coverage | Accident-Only | Accident-Illness | Accident-Illness + Wellness Add-on |
|---|---|---|---|
Emergency care for accidents | Yes | Yes | Yes |
Treatment & tests for injuries | Yes | Yes | Yes |
Emergency care for illnesses | No | Yes | Yes |
Treatment & tests for illnesses | No | Yes | Yes |
Breed-specific conditions | No | Yes | Yes |
Routine care | No | No | Yes |
Wellness exams | No | No | Yes |
Vaccines | No | No | Yes |
Pre-existing conditions | No | No | No |
The terms “accident” and “illness” might seem a bit vague, but there’s a difference between the two. An accident occurs when a pet is physically injured in an incident, which may result in fractures (broken bones), burns, cuts, or other physical injuries. Insurance that covers illnesses will cover treatments for viral infections, parasites, hip dysplasia, and even tooth extraction in the event of dental diseases, in some cases.
Accident-only plans will only provide reimbursement for emergency care related to accidents, like if your pet is hurt by a car or injures themselves by falling down the stairs. This type of coverage does not cover illnesses or breed-specific issues
Accident-illness plans provide coverage for both accidents and unexpected illnesses. It is the most common, as it represents about 98% of plans issued by the pet insurance industry. This type of plan won’t cover preventive care or pre-existing conditions, but you can expect reimbursement for almost everything else.
Finally, you can purchase an accident-illness plan with a wellness add-on. This is the most expensive type of plan on the market, but it provides the most comprehensive level of coverage. The only health issues that aren’t covered pre-existing conditions.
💡 NOTE: A Wellness Plan is not actually considered pet insurance. They help with costs around routine care, preventative care, checkups, and yearly vaccines, but not much else. These are usually sold as add-on features to other health insurance plans. This type of plan does not cover accidents, common injuries, or emergency treatments for illnesses.
🧡 RESOURCES:
How Much Does Pet Insurance Cost?
Pet insurance is generally affordable. The average monthly premium is $29 for a cat and $47 for a dog, but it’s important to recognize that there's a wide range in pricing (many see rates as low as $12/mo, others might see rates as high as $100/mo) depending on a few key factors.
Key Factors That Determine Rates
- Size (height, weight)
- Breed
- Age (compared to its typical life expectancy)
- Location
- Common indoor and outdoor risks in area
- Term and length of insurance policy
- Reimbursment Rate
- Deductible
- Payout Limit
- Plan type
- Policy provider
You can save on pet insurance by enrolling when your pets are still young, as your monthly premiums are guaranteed to be lower. Some pet insurance providers will also give you a discount on your bill if you agree to make annual payments instead of monthly payments. Others offer discounts if you insure multiple pets under the same provider.
Another way to keep your premiums low is to select a higher deductible, but keep in mind that you’ll have to reach that deductible by paying out-of-pocket before your insurance plan begins to reimburse your veterinary costs.
Similarly, you can keep costs down if select a lower reimbursement rate or a lower coverage limit, but this will limit the amount you receive from your insurer if your pet gets seriously ill or injured.
💡 NOTE: You can use Pawlicy Advisor's free analysis tool to see the Lifetime Pricing Score for each plan, customized to you.
So, Is It Worth The Cost?
Dr. William Hodges, DVM, Dr. Ricky Walther, DVM, Aliyah Diamond, Surgery Technician, and thousands of other veterinary professionals say "yes, it is worth it." Now, if your pet and older and already diagnosed with several conditions it is likely not the right tool, but for many (especially new puppy/kitten parents) it can be a literal lifesaver.
Many pet parents agree:
Where Should You Buy Pet Health Insurance?
There are three ways to enroll in pet insurance:
- Through the provider companies.
- Through employer benefits.
- Through the #1 pet insurance marketplace recommended by veterinarians.
💡 NOTE: Wellness plans can be acquired as add-ons should you purchase accident-illness coverage through a top provider on Pawlicy Advisor's marketplace. You can also get a Wellness Plan as a separate enrollment through a dedicated wellness provder or your local veterinary clinic.
Detailed Insurance Provider Reviews:
- ASPCA Pet Insurance Review & Coverage Details
- Pets Best Pet Health Insurance Review & Coverage Details
- FIGO Pet Insurance Review & Coverage Details
- Fetch Pet Insurance Review & Coverage Details
- PetFirst Pet Insurance Review & Coverage Details
- Hartville Pet Insurance Review & Coverage Details
- Lemonade Pet Insurance Review
- Walmart Pet Insurance Review
Detailed Wellness Provider Reviews:
The Pet Insurance Marketplace Veterinarians Recommend
As pet parents, we know searching for pet insurance is complicated. We know that review sites don’t provide enough information. We also know having to submit a quote form with "every" "single" "provider" is a horrible user experience.
Instead, pet parents can use Pawlicy Advisor to see pet insurance quotes from top providers, custom comparison charts, and ranked based on breed-specific health risks and lifetime pricing - all in one place.
The Problem With Simple Review Aggregators
Review aggregators can be a great tool for understanding context on customer service experiences - however, they should not be the deciding factor in your evaluation.
Simple review sites don’t provide pet parents with transparency on policy details, breed exclusions, and lifetime costs. Negative reviews don’t necessarily mean that the provider or the plan is a poor choice, rather, it’s quite possible that the plan was a bad fit for the individual reviewer.
Similarly, good reviews don’t offer much information. Every provider has good reviews. The number of reviews is more correlated review collection efforts or brand awareness, rather than how “good” an insurance option is.
The Magic Behind Pawlicy Advisor
Pawlicy Advisor analyzes your pet’s health risks, coverage options on the market, and price differences to recommend a policy that will save you substantial money and frustration over your pet’s lifetime.
See more 5-star reviews on Facebook and Google.
Fill out one form to run an analysis across hundreds of policy variations from top providers and compare plans in custom comparison charts.
Our goal is to transform the pet insurance industry and enable more people to get their pets the affordable care they need.
🧡 RESOURCES:
Key Takeaways
- Over 2,438,795+ dogs and cats have pet insurance across the U.S.
- Pet insurance helps protect you from unexpected vet bills and gives you peace of mind.
- Whether your pet is susceptible to allergies, developing chronic conditions, or suffering from an accident/injury, plans can put thousands of dollars back into your pocket.
- Anyone who owns a pet should consider pet insurance. While it may be tempting to avoid the monthly costs while your pet is still young and relatively healthy, you can never anticipate what might happen as they grow older. Some conditions can develop rapidly, and accidents happen.
- Most pet insurance programs are for dogs or for cats, as they tend to be the pets that are most expensive to treat. However, there are plans out there that cover birds, reptiles, and other types of pets.
People Also Ask...
What is pet insurance and how does it work?
Pet insurance is health insurance for your pet. It covers (reimburses) the costs of treating unexpected injuries and illnesses, so you don’t have to worry as much about expensive vet bills. Unlike human health insurance, you can use your benefits an any vet or animal hospital.
Is it worth it to have pet insurance?
1 out of 3 pets will need emergency treatment, and most Americans can’t afford unexpected veterinary bills. Pet insurance helps you afford these costs, so your pet always gets the care they need.
How do you use pet insurance?
After paying a vet bill, you can submit a claim for reimbursement to your insurance provider. Most pet insurance companies let you submit claims online, by phone, or by mail.
How does a pet insurance deductible work?
The deductible is the portion of the bill you’re responsible for before you can start being reimbursed for veterinary costs. Most plans come with an annual deductible. For example, if your annual deductible is $1,000, you’ll need to pay for $1,000 in veterinary costs each year before you can start getting reimbursed for veterinary costs.
What is the best pet insurance?
Every pet and pet parent has unique needs, but the most popular type of pet insurance is called an accident-illness plan. This type of plan covers the most expensive injuries and illnesses, and it’s generally affordable for most pet parents.
When shopping on Pawlicy Advisor, rest assured we only work with the best providers in the industry - and our algorithm will analyze hundreds of options to help you compare the best dog & cat insurance plans based on breed, location, age, lifetime savings, and more.
How much is pet insurance and what does it cover?
The average cost for the most common pet insurance plans (accident-illness plans)is $29/mo for cats and $47/mo for dogs. This coverage reimburses emergency care as well as treatments and tests for unexpected accidents and illnesses like cancer, poisoning, foriegn ojbect injestion, surgery, x-rays, glaucoma, and more.
What factors determine the cost of pet insurance?
The size, breed, age, and geographic location of your pet all influence the cost of your insurance policy. The length of your policy and the company offering your plan also play a role. Finally, you get to determine what type of policy works best for you by selecting a quote that makes sense for your budget.
Can you customize your pet insurance plan after purchasing?
There's no "one-size-fits-all" solution for pet insurance, and many providers allow you to customize your plan to accommodate your personal needs and preferences. While sites like Pawlicy Advisor can help you pick a great pet insurance plan from the start, life happens and things can change, so you might want to change your plan after purchasing. Depending on your provider, this may be possible; however, you may be required to wait until your policy renewal to add or drop coverage to your plan for the following period.
How long does pet insurance take to kick in?
After you purchase insurance, there will be a waiting period in which some coverage is restricted. Waiting periods are determined by the pet insurance company, so it’s important to check before you sign up. Most waiting periods last only 14 days.
How do you know which vets accept pet insurance?
Pet insurance doesn’t pay your veterinarian directly. Instead, your provider will reimburse YOU for your veterinary costs after you pay your vet and submit a claim to the insurance company. This way, you don’t have to worry about whether your vet takes a certain policy or not — you can use any veterinarian you like!
Can pet insurance cover neutering?
Most pet insurance policies don’t cover neutering, but some pet wellness plans will cover it.
Can pet insurance be transferred to a new owner?
Some pet insurance plans are transferrable to a new owner. Contact your pet insurance provider to learn more about their transfer policies.
Can pet insurance drop you?
Yes. A pet insurance company might cancel your policy if you don’t pay your monthly premiums. In addition, some pet insurance policies may drop levels of coverage after your pet reaches a certain age.
Can pet insurance be canceled?
Yes. Most providers allow you to cancel your pet insurance policy at any time.
Can pet insurance cover antibiotics?
If your pet insurance plan covers prescription medications, then it should cover antibiotics, unless they are prescribed to treat a pre-existing condition.
How does pet insurance work nationwide?
You can use most pet insurance plans at any veterinarian you choose. However, if you decide to move to a new state, your policy may change based on state laws and other factors.
Where can you get pet insurance?
You can get pet insurance by contacting any pet insurance company directly. The easiest way to get it is to search for a plan on Pawlicy Advisor and sign up online.
Why is pet insurance important?
Many pet parents must make decisions about their pet’s care based on cost. However, pet insurance helps by reducing financial risk and ensures your pet can always have access to quality care at an affordable rate.
Why get pet insurance?
Most pet owners get pet insurance for peace of mind. It protects them against the financial risk of expensive veterinary service often required for sick or injured pets.
Will pet insurance cover spaying?
Most pet insurance plans won’t cover the cost of spaying, but a pet wellness plan can cover the procedure.
Will pet insurance cover surgery?
Yes. A comprehensive accident-and-illness pet insurance plan should cover most surgeries. However, it will not cover elective surgeries or surgeries to treat a pet’s pre-existing conditions.
Will pet insurance cover luxating patella?
Most pet insurance plans will cover luxating patella if it’s discovered after your policy enrollment. Some insurance policies may include a waiting period for certain hereditary and congenital conditions.
Will pet insurance cover vaccinations?
Neither accident-and-illness plans nor accident-only plans cover vaccinations, but you can get them covered under a pet wellness plan as an add-on feature.
Will pet insurance cover hip dysplasia?
Many pet insurance plans cover the cost of hip dysplasia, but you may be subject to a waiting period post-enrollment for coverage to begin.
Will pet insurance cover medication?
Yes. Many pet insurance plans cover prescription medications.
Will pet insurance cover hernia surgery?
Yes. Many pet insurance plans cover hernia surgeries, but they won’t cover hernia surgery if the hernia is a pre-existing condition.
When can you claim a vet bill?
You can submit a claim for reimbursement after paying your veterinarian for their services. However, some policies may require you to wait a certain number of days after your policy activates before you can submit a claim.
Can pet insurance be backdated?
If your pet passes away, many pet insurance companies will backdate your premiums and refund you. However, no pet insurance plan will cover treatment provided before your policy enrollment date.
What is pet insurance like?
Pet insurance works a lot like car insurance. It’s designed to protect you from financial risk by reimbursing you for planned and unplanned vet costs.
Does pet insurance cover heart murmurs?
Pet insurance can cover a heart murmur, but not if it’s a pre-existing condition. If your pet develops a heart murmur after your effective policy date, then your insurance should cover it.
References
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Licensed Insurance Producer - Pawlicy Advisor
Kari Steere is a licensed P&C insurance agent in all 50 states and has focused entirely on pet insurance since 2019. As an animal lover with a rescued Terrier named Barry, when she's not helping pet owners find the perfect plan on Pawlicy Advisor, she runs a ranch in Oregon and rehabilitates any animals that come across her path.
