Cat and dog cuddling on grass

How Does Pet Insurance Work?

Pets can bring an immeasurable amount of love into our homes. The unspoken bond is hard to describe to a non-pet owner, but the shared loyalty is obvious and unconditional.

Cats and dogs have not always been welcome indoors but fast-forward a few decades, and our furry friends are now sleeping in our beds and have dedicated clothing lines. The American Kennel Club estimates that people will spend between $23,000 to $40,000 on their pets during their lifetime.

All loving pet owners want to protect their little fur babies to the Nth degree, but veterinary bills are not cheap and can rack up fast.

Luckily, with the rise of the pet industry came pet insurance, added financial support for the wellbeing of our four-legged companions.

After sifting through all the stipulations and small print has only complicated how to find the right insurance agency to partner with, you may still be asking yourself, “how does pet insurance work?” If that’s the case, this handy guide can help

Table of Contents

How Does Pet Insurance Work?

Unlike the human health insurance that we are used to, pet health insurance is similar to property insurance.

In the simplest terms, customers pay a monthly policy premium for the lifespan of their pet. It is the policy holder’s responsibility to foot the vet bills for any veterinary services provided before submitting a claim for the insurer to reimburse a percentage of the final bill.

White dog sitting in front of owners

There are five common terms you’ll come across during the pet insurance process:

  • Policy: The contract and coverage of your insurance plan.
  • Premium: The amount you pay monthly out of your own pocket. The more you pay each month, the more the plan covers.
  • Deductible: The agreed percentage the insurer will not reimburse. The higher the annual deductible, the lower the policy fee, and vice versa.
  • Copay: The cost you owe yearly before the insurance begins.
  • Copay: The limit on the amount of money the insurance company will payout.
  • Exclusions: Exceptions that the insurance policy will not cover, such as pre-existing conditions.

Monthly premium prices vary depending on a slew of deciding factors, including species, age, breed, and location.

There are a multitude of pet insurance plans to choose from, but it is important to remember that pre-existing conditions are never covered, meaning if there is a past medical record of an injury from an accident or illness before purchasing the pet plan, insurance companies will generally decline to offer a service.

Cat sitting on wooden table

What Does Pet Insurance Cover?

So, how does pet insurance work regarding coverage? There are two main types of pet health insurance plans available on the market: accident-only and comprehensive.

The difference between the two is that an accident-only plan quite literally only covers accidents. In contrast, a comprehensive plan will cover accidental injuries, as well as different ailments ranging from kidney disease to hereditary conditions like hip dysplasia.

Companies will always have a waiting period between the time of your pet’s enrolment and when the insurance kicks in, so the earlier your pet is signed up, the more coverage your furry friend will receive.

How to Choose the Right Pet Insurance Policy

Finding the right pet insurance policy can be as easy as speaking with your veterinarian or scouring Yelp reviews.

Policies differ based on the specific needs of your pet and your budget. Many pet insurance companies offer free, immediate quotes on their website if you simply fill in your pet’s information.

Choosing the right policy is a personal choice, but animal-loving customer service agents are also there to help you with your decision.

To maintain a consistent experience with all pet health professionals, the North American Pet Health Insurance Association (NAPHIA) was created in 2007 within the pet marketplace to help set professional standards.

As of mid-2020, the NAPHIA has represented 97% of all pet policies in North America, with 2.82 million pets insured. With its development, analysis, reporting, and publishing of information on pet health, insurance companies can help navigate all possibilities to find the best solution for your furry family member.

Is Pet Insurance Worth It?

This question is a tough question that most pet owners debate from day one, regardless of whether the new pet is a rescue or from a reputable breeder. Pet insurance makes the most sense when your pet is young and the premium prices are low.

It is definitely worth researching different pet insurance options that can help pay for unforeseen medical expenses throughout your pet's life. There's no worse feeling than being forced to make a life or death decision based on your wallet!

When researching pet professionals, research your pet's breed, too. Just make sure the coverage and cost are fair to any possible medical conditions that their breed or age is prone to.

Helpful Tips About Pet Insurance

Here are some helpful tips to consider before purchasing pet insurance.

  • Don’t be afraid of the pricier policies: The higher monthly premium policy fee would mean a lower deductible and copay. The opposite implies higher out-of-pocket payments at stressful times.
  • Check for discounts: Veterinary care clinics will sometimes offer discounts for multiple pets.
  • Cover the unexpected: A company that offers unlimited or very high payout caps tends to offer support for more unpredictable trouble.

Our Final Thoughts

From sifting through companies to reading all the terms and conditions, there is an abundance of information that can throw anyone off their game when it comes to pet health insurance. This is probably one of the reasons why less than 5% of pet owners have purchased policies.

According to a study by the NAPHIA, the average monthly insurance policy for a dog is $47 per month, and for a cat is $29.50 — roughly equaling $1-2 per day.

It is worth the peace of mind, especially when the clinic staff helps simplify any insurance claims process. The pet industry grew from a love for animals and wanting the best possible treatment for our furry best friends.

We spend big money on trendy collars and matching leashes; why start penny-pinching when it comes to their health?

Frequently Asked Questions

Yes, pet insurance premiums are different around the world. One of the main factors in pricing premiums is the location, taking into account the cost of living and lifestyle.

Yes, pet insurance premiums are different around the world. One of the main factors in pricing premiums is the location, taking into account the cost of living and lifestyle.

Sweden was the first country to provide insurance for a dog in 1924. The policy became so popular that 50% of all Swedish dogs are currently covered.

Britain began offering pet insurance policies in 1947, and to date, roughly 24% of British pet owners now have their pets insured.

North American pet insurance was only popularized in 1982 thanks to a famous dog named Lassie.

When it comes to pet insurance, you will always be in-between the veterinary clinic and your insurance company, so paying the clinic from your own pocket gives you the freedom to see any licensed vet.

The reimbursement from your insurer could then take anywhere between two days and two months.

Iguanas can make great pets if they are properly cared for. They may be readily available at pet stores for an affordable price, but that doesn’t necessarily mean they are easy to manage.

Though it is manageable, exotic pets require special care in regards to their habitat and diet. Pet insurance companies will rarely cover lizards because common health issues are often connected to their care at home. Remember that they can grow up to seven feet!

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