WealthRocket is reader-supported. When you buy through links on the website, we may earn an affiliate commission.

How Does Pet Insurance Work?

padlock icon

Why you can trust us

The team at WealthRocket only recommends products and services that we would use ourselves and that we believe will provide value to our readers. However, we advocate for you to continue to do your own research and make educated decisions.

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

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.

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.

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

Related Articles

Car in a driveway

What is Comprehensive Insurance?

Aaron Broverman January 9, 2023

Read more
Drawing of a man and a woman with a dog, cat under an umbrella

What is pet insurance?

Zack Fenech October 30, 2023

Read more
Drawing of a family looking at three different health insurance plans

What is a health insurance deductible and how does it work?

Nadya Camerino October 30, 2023

Read more
Drawing of a man packing up his desk with a box

How to Apply for EI in Canada

Jordan Lavin June 5, 2024

Read more
Drawing of a man standing and holding a shield beside a red car

How Much Does Car Insurance Cost in Canada?

Zack Fenech October 27, 2023

Read more
drawing of woman with suitcase getting travel insurance from a man at a desk

What is travel insurance and how does it work?

Jordann Kaye October 27, 2023

Read more