How Does Pet Insurance Work?

When you add a pet to your life, you dedicate large portions of your time, energy, and income to your beloved animal. Like all pet owners, you want the best for your pets, including the best possible veterinary care. But as veterinary technology improves, the cost of proper veterinary care often goes up along with it. As a pet owner, you need to prepare for unexpected costs, and pet insurance can be a big help.

That's why so many pet owners turn to pet insurance policies to help them save money on routine and emergency care. Some pets require treatments that can cost hundreds or thousands of dollars, but pet parents can find themselves paying a fraction of the cost with the right pet insurance policy. Some insurance companies even cover 100 percent of qualified veterinary expenses.

Depending on the company, pet insurance can cover routine and preventative care, accidents, illnesses, emergencies, and specialist care. Finding the best coverage for you and your pet can mean a world of difference in accessing the best veterinary care.

How do pet insurance claims, payout limits, and deductibles work?

Claims

Pet insurance is a type of health insurance that typically uses a reimbursement system for veterinary and wellness care. That means that most companies require pet owners to pay the veterinary bills up front. Afterward, they file a claim to be reimbursed for a percentage of the vet invoice. The reimbursement amount is usually between 70 and 90 percent for all qualifying treatments.

Some pet insurance companies, like Embrace, Pets Best, and Healthy Paws, offer a vet-direct payment method, similar to human health insurance. That means that the insurance provider will pay its portion of the vet bill directly to any clinic, rather than wait through the reimbursement process. The reimbursement process typically takes 10 business days. Some companies, like pet wellness company Wagmo, can complete them within 24 hours, and others, like ASPCA pet insurance, can take upwards of 30 days.

Deductibles

Deductibles are like co-pays, which means they are paid out of pocket before your insurance can make any reimbursements. Policyholders are typically required to meet either annual or per-incident deductibles.

Choosing an annual deductible means that policyholders only have to meet the deductible once per year. They are usually between $100 and $1,000. The higher the deductible amount, the lower policyholders typically pay each month.

Choosing a per-incident deductible means paying a deductible every time your pet has a different condition. Depending on the company, selecting a per-incident deductible could mean a cheaper monthly premium. However, if your pet gets sick multiple times per year, it could cost you more out of pocket.

Payout Limits

Payout limits are among the most important aspects to consider when looking into pet insurance because they determine the total amount of money that the pet insurance provider is willing to pay toward all medical bills. Most insurance providers offer annual payout limits, but some include incident and lifetime payout limits. The amount of the payout limit plays a significant factor in determining the monthly premium and determines the amount of accessible vet care.

Annual limits can range from $2,000 to $100,000 per year, and some companies even offer an unlimited yearly payout. Choosing a $2,000 payout limit might lessen the cost of your monthly premium. Still, it won’t be beneficial if your pet were to develop an expensive disease, like hip dysplasia, or require cancer treatments.

Some companies, like AKC, implement an incident policy, which also lowers accident and illness coverage. Incident limits are the set amount of money that an insurance provider will pay toward a specific condition for the remainder of the pet’s life. That could impede care for congenital conditions and recurring illnesses. The maximum incident limit depends on the company, but AKC only offers an $8,000 incident limit. That means they will stop reimbursing any veterinary costs after $8,000.

Lifetime payout limits are another factor that could hold back critical veterinary care. These payout limits refer to the maximum amount of money that the insurance provider will pay for your pet for the entirety of its life. Providers like Trupanion don’t have payout maximums, but some providers will cap your coverage as low as $150,000.

How much does pet insurance cost?

Several variables out of your control determine the cost of pet insurance. These include your pet’s species, breed, age, and size and where you reside. Typically, larger, older, purebred pets in cities with a higher cost of living pay more per month for pet insurance plans.

In addition to the factors above, several customizable choices can impact the monthly premium. Pet parents can typically adjust the coverage plan, reimbursement rate, payout limits, and the annual or pre-incident deductible. Generally, if pet parents choose options to give them more coverage, it costs more per month. This also means that comprehensive accident and illness coverage usually costs more than wellness plans and accident-only coverage options.

Pet insurance quotes are usually higher for dogs than for cats, and higher for purebred pets than for mixed breeds. Policies for purebred dogs average $83.29 per month, and plans for mixed-breed dogs average $54.98 per month. Purebred cat policies average at $39, and mixed-breed cats average at $27.

Nationwide is the only insurance company that offers coverage for exotic pets. Pets like birds, reptiles, and farm animals typically cost between $8 and $16 per month. Parents of exotic pets can also take advantage of Pet Assure’s veterinary discount program, which costs between $6.58 and $21.95 per month depending on the weight of any pet.

Things to Keep in Mind Before Buying Pet Insurance

When choosing to purchase pet insurance, several variables determine whether a company will be the perfect fit for your furry family member. Traditional pet insurance policies, a name which refers to comprehensive accident and illness coverage, are ideally purchased for young, healthy puppies and kittens. This avoids the issue of a possible build-up of pre-existing conditions. No comprehensive pet insurance plan will cover pre-existing conditions. This can be a tough obstacle to navigate for older or chronically ill pets. However, some companies forgive what they deem “cured” pre-existing conditions, which can be very beneficial to new policyholders.

Insurance companies use this system to lock in policyholders for the duration of their pets’ lives, because once the policy lapses, all medical conditions will revert to pre-existing conditions. This can seem intimidating and predatory, so finding a good company that you trust is important.

If your pet has to be locked into a policy to maintain its coverage standing, it’s essential to look for plans that don’t enforce any age limits. It’s also important to look at plans that don’t include per-incident maximum payouts and maximum lifetime payouts. These reimbursement caps can determine your pet’s access to the best possible medical care. Pet parents should have the most peace of mind with companies that offer the most coverage, including unlimited payouts and different add-ons, like wellness plans.

Older and chronically sick pets are better suited to other options, like discount plans. Pet Assure offers a 25 percent discount on all veterinary fees for a flat rate determined by the weight or quantity of your pets. This discount even covers pre-existing conditions and wellness care, like routine check-ups or heartworm prevention.

Some traditional insurance providers can be very particular when it comes to what they won’t cover. Often, pet parents find themselves with steep vet bills because of denied claims. It’s always important to read through any company’s terms of service and any sample policies. Some companies will hide coverage exclusion, which can result in a severe financial upset later.

Typical policy exclusions include pregnancy-related fees, dental disease, hip dysplasia, knee problems, problems resulting from working animals, and behavioral treatments. Companies like AKC will even deny coverage for repetitive injuries or health issues that they deem unsafe. That means that if your dog has a habit of eating out of the trash, they can deny your claims for foreign object obstruction.

Where do you buy pet insurance?

With so many essential factors to consider when buying pet insurance, it’s evident that not all companies are created equal. That is why it’s so important to do your research. You should look into policies with a clear understanding of what you want and what you can realistically find. It would also be a good idea to research the breed-specific diseases your pet might get later in its life.

Most companies let potential clients create a quote and see a sample policy before choosing to buy anything. That is a great tool when it comes to finding the perfect plan for your pet. It’s also a good idea to check out consumer reviews to see what other policyholders are saying.

At Insurify, we know you want unbiased reviews to help sort through your insurance provider options. Check out insurify.com/blog/ pet-insurance / for our takes on pet insurance companies, policies, and pricing.