What Is Pet Insurance and How Does It Work?
If your pet is hurt or sustains an injury, having a pet insurance policy can make out-of-pocket payments for treatment more affordable in the long run.
Key Takeaways
- The three typical pet insurance plan options are accident-and-illness, accident-only, and wellness.
- With most policies, you must pay veterinarian expenses up front and file a claim for reimbursement with your insurer.
- Preexisting conditions and grooming costs aren’t covered by pet insurance.
According to the North American Pet Health Insurance Association (NAPHIA), there was a 12.7% increase in the total number of insured pets from 2023 to 2024. Pet insurance ensures you can afford the proper care for your pet in case of injury or illness. It can also help cover routine and preventive care, depending on your policy.
Pet insurance reimburses you for a percentage of veterinary expenses relating to your pet’s illness or injury, depending on your coverage, and requires you to pay a monthly premium.
Most insurers only cover cats and dogs, and some have breed and age restrictions for enrollment. Overall, while pet insurance isn’t required, it provides peace of mind to owners in case their pet needs expensive treatment or even just routine care.
Types of Pet Insurance Plans
- Accident-and-Illness: Accident-and-illness plans cover treatment for accidents and various illnesses such as infections, chronic conditions, cancer, arthritis, diabetes, allergies, and hereditary diseases.
- Accident-Only: Accident-only plans cover injuries sustained in accidents, from cuts and broken bones tothe consumption of foreign objects.
- Wellness: Wellness plans reimburse owners for routine and preventative care. These are usually add-on options to other plans, but are occasionally offered as a standalone policy. Such plans may cover immunizations, dental cleanings, annual exams, and flea and tick treatments. Some plans even reimburse you for spay and neuter surgeries.
For your pet insurance policy, you’ll pay a monthly premium. Then, if your pet visits the vet, your pet insurance will cover some of the cost. Remember that most pet insurance requires you to pay the veterinarian and submit a claim for reimbursement afterward. However, some insurers will pay the veterinarian directly, and the only out-of-pocket cost you’ll be responsible for is the percentage not covered by your insurer.
Your pet insurance coverage and cost are determined by the deductible, reimbursement rate, and annual limit you choose. Understanding your options is crucial because you may not be able to change your choices until your renewal period.
Deductibles
Your pet insurance deductible is the amount you must pay out-of-pocket before coverage begins. There are annual and per-incident deductibles. An annual deductible requires you to meet the deductible within the year before reimbursement, while a per-incident deductible requires you to pay a deductible for each vet visit. Your policy will state the amount.
For example, if your annual deductible is $500 and you submit your first claim of the year for $600, insurance will reimburse you up to $100, depending on your reimbursement rate. Then, when you submit your next covered claim that’s, for example, $300, your policy will cover your reimbursement percentage of the full $300 because you’ve already met your deductible for the year.
Reimbursement Rates
The reimbursement rate is the percentage your insurer pays for your pet’s covered medical expenses after meeting your deductible. You can typically choose a set rate between 70% and 90%. Remember, however, that the higher your reimbursement rate is, the higher your premium will be.
To continue with the above example: Say you’ve already met your $500 annual deductible, and you’ve now submitted a claim for $300. If your reimbursement rate is 70%, your insurer will pay $210, and you’ll only have to cover the remaining $90.
Annual Coverage Limits
An annual coverage limit is the total amount your insurer will reimburse you for your pet’s covered veterinary costs in a given policy year. You’ll be responsible for all expenses after your pet meets your insurer’s annual coverage limit. Annual coverage limits vary by insurer and policy; they can be as low as a few thousand dollars to, in some cases, unlimited.
Note that if you don’t meet your annual coverage limit during the policy year, it won’t roll over to the next. Also, your premium will be more expensive if you choose a higher annual coverage limit.
Claims Process
Filing a claim to get reimbursed is fairly straightforward, but the process varies by insurer. It can take up to a month, depending on the type of claim, your policy, and your insurer. Always consult your specific provider, but you’ll typically follow these steps:
1. After your pet is treated by a licensed veterinarian, pay the bill and get an itemized receipt.
2. Submit a claim form – usually found on your provider’s website – and your receipt to your insurer.
3. After review, if your claim is approved, your insurer will pay you for your reimbursement rate via direct deposit or mailed check if your deductible has been met.
What pet insurance covers is determined by the type of policy you choose: an accident-and-illness plan, an accident-only plan, or a wellness plan. Depending on your policy, pet insurance can cover injuries related to illnesses, hereditary diseases, accidents, and routine and preventative care.
Here are some specific examples of veterinary care that may be covered:
Pet insurance usually doesn’t cover preexisting conditions or costs associated with nonvet-related care such as grooming and boarding. Preexisting conditions refer to your pet’s diagnosed illnesses or conditions that were present before your policy’s start date. (If your pet develops a condition or illness before the waiting period ends, it’s usually considered preexisting.) However, depending on your insurer, if you switch insurance providers and the preexisting condition was covered previously, it may be covered by your new insurer.
If your pet’s preexisting condition has been cured – meaning your pet has been symptom-free – for a minimum of six months and you have proof from your vet, it may be reviewed for coverage by some insurers.
- Breeding and pregnancy
- Congenital anomalies and developmental disorders
- Cosmetic procedures such as declawing and tail docking
- DNA testing
- Elective procedures
- Injuries from racing, illegal fighting, commercial guarding, and neglect
- Nail trims
- Routine and preventive treatment
A waiting period is the time between when you purchase a policy and when coverage starts, and a claim can be made. For example, if your policy begins on the first of the month and you have a 14-day waiting period for accidents and illnesses, vet visits won’t be covered until the 15th.
Waiting periods protect insurers, as insurance is supposed to cover unexpected injuries and illnesses. Without a waiting period, the fear is that pet owners may wait until their pet gets injured or sick to enroll them in a policy. Waiting periods are also meant to protect providers against fraud from claims made relating to preexisting conditions or other veterinary care before the policy was purchased.
Waiting periods for illnesses are usually longer than for accidents and can be up to two weeks, depending on the insurer. Orthopedic problems and cruciate ligament issues have the longest waiting periods of up to one year.
Pet insurance premiums can vary greatly depending on the insurer, policy details and your pet. Ultimately, the best way to know how much you’ll pay is to get a quote from your insurer. However, we have average rates to give you an idea of cost. In our rating of the best pet insurance companies, average monthly premiums range from $47.58 to $165.49 for dogs and $29.36 to $83.41 for cats.
Also, according to NAPHIA, the average monthly premiums for an accident-and-illness policy in 2024 were $62.44 for dogs and $32.21 for cats.
Pet insurance isn’t required, and investing in it is your choice. Pet insurance may be worth it if your pet is predisposed to certain conditions or highly active and easily injured. Also, knowing that coverage can potentially save you thousands of dollars related to unexpected injuries and illnesses can give you peace of mind.
For example, chemotherapy can cost up to $600 per dose, according to the Veterinary Cancer Society. However, if your pet leads a generally healthy life or you know you can afford to pay for expenses, you may decide having coverage isn’t worth it.
The American Veterinary Medical Association states it “endorses the concept of pet health insurance that provides coverage to help defray the cost of veterinary care and encourages veterinary teams to proactively educate clients about the existence of these resources.”