Is Pet Insurance Worth It?

How Does Pet Insurance Work?

Pet insurance helps cover the cost of medical care for your pet. Like health insurance for humans, you purchase a specific plan and pay a premium each month to keep your pet insured. Then, when you incur a medical expense, you may be eligible for partial or full coverage.

Understanding the Deductible

A deductible is what you’d need to pay out-of-pocket before your health insurance company reimburses any expenses. For example, if you had an insurance policy with a $500 deductible and you had a vet bill for $2,000 dollars, you would have to pay at least $500 out of pocket before your coverage kicked in. If you had a vet bill for $600 you would still have to pay $500 dollars before your insurance company covered anything.

As the policyholder, you can select a plan with the deductible amount you prefer. Typically, pet owners base this decision on how much they could reasonably afford to pay out-of-pocket, but it’s worth bearing in mind that policies with lower deductibles often have higher premiums.

Each eligible expense counts toward your deductible. For example, under the same plan described above, three $75 trips to the vet would amount to $225 toward your deductible. Only after you’ve spent another $275 and crossed the deductible threshold will expenses be partially, or fully, covered.

Reimbursement Levels

Along with the deductible, you also need to factor in reimbursement levels. Depending on your policy, your insurance company will give you a certain reimbursement level. This is the amount of the cost you’ve paid that they will pay you back for. The reimbursement level applies to the amount you’ve paid after the deductible.

So if you had a $2,000 bill with a $500 dollar deductible and a reimbursement level of 90%, your provider will reimburse you for the 90% of the $1,500 amount left after the deductible. In this scenario, you would pay $650 of the $2,000 bill ($500 deductible plus 10% not covered by your insurance provider).

Filing Pet Insurance Claims

Unlike health insurance policies for people, you typically won’t pay a copay at appointments for your pet. Instead, you’ll need to foot the entire bill at the time of the expense, submit it to the insurance company, and wait for reimbursement. 

Annual Maximum Limit

Some pet insurance plans have annual maximum payouts. For example, let’s say your plan has a $10,000 annual limit. If your furry friend racks up $30,000 in vet bills one year, you won’t receive reimbursement for the full amount. Pay close attention to the policy’s annual limits when selecting a plan.

What Does Pet Insurance Cover?

While each pet insurance plan differs, there are a few common things they do and don’t cover.

What It (Typically) Covers

Most pet insurance plans cover:

• Unexpected or accidental injuries (swallowing a foreign object, broken bones, etc.)
• Unexpected illnesses (gastrointestinal illnesses, parvo, kidney disease, etc.)
• Chronic disease (diagnosed after the plan was purchased)
• Cancer diagnosis and treatment
• Dental illnesses
• Medical testing (x-rays, allergy tests, etc.)
• Medication
• Surgery
• Emergency care

With most pet insurance plans, you can expect 60-100% of these expenses to be reimbursed – after you’ve met your deductible, that is.

Some policies are less comprehensive. Accident-only policies, for example, tend to be cheaper but only cover unexpected injury or accident, rather than illness.

What It Doesn’t Cover

Pet insurance does not cover pre-existing conditions and on top of this, most plans also don’t cover:

• The cost to spay or neuter your pet
• Pet supplies (food, toys, and treats)
• Vaccinations
• Routine care (annual checkups)
• Teeth cleaning
• Elective surgeries
• Preventative care
• Boarding and daycare
• Training

Because pet insurance doesn’t cover these costs, you’d have to pay 100% of the bill on your own.

However, while standard pet insurance policies don’t cover these costs, there are some types that do.

Types of Pet Insurance

There are three main types of pet insurance: Accident-Only, Accident-Illness, and Accident-Illness + Wellness Add On. 

Accident-Only pet insurance covers emergency care related to accidents. This covers things like your dog breaking a tooth when they’re chewing on a stick or your cat breaking a bone on an overly courageous jump from its lofty cat tree.

Accident-Illness insurance covers both accidents and illnesses like cancer, ringworm, and urinary tract infection – all of which are common in cats and dogs.

Accident-Illness coverage with a Wellness add-on is the most comprehensive level of coverage pet insurance offers. On top of the standard Accident-Illness coverage, it also covers routine preventative care such as teeth cleaning, vaccinations, and the cost to spay or neuter your pet.

How Much Does Pet Insurance Cost?

The cost of pet insurance depends on a variety of factors, such as:

• The type of pet you have
• Your pet’s age
• Your location
• The level of coverage you want

Average Pet Insurance Premiums (U.S.), Based on NAIPHA Research	Accident Only	Accident & Illness
Dogs	$19.93/month	$48.66/month
Cats	$10.85/month	$28.57/month

The cost of Wellness add-on coverage varies depending on the plan and level of additional coverage. For example, Prudent Pet’s Wellness Add-On will run you $20 per month for a dog and $14 per month for a cat. Lemonade, however, would cost you $28 per month for a dog and $22 per month for a cat.

 Keep in mind that as your pet ages, the premium is likely to increase. This is because pets, like humans, tend to face more health issues in their later years.

Average Monthly Pet Insurance Premiums by Age	Dogs	Cats
6-months old	$39.39	$23.69
18-months old	$39.34	$23.68
5.5-years old	$48.89	$27.89

Breed-Specific Health Risks and Considerations

Before making your final decision on whether pet insurance is worth it, consider the breed of your pet. Certain breeds, such as border collies, are predisposed to medical conditions that could rack up a hefty vet bill in a heartbeat.

If your pet’s breed is more prone to medical issues, pet insurance may make more sense for you.

What is An Alternative to Pet Insurance?

If you just can’t get down with the idea of forking over a monthly premium, consider these alternatives to pet insurance:

Personal Savings

Dipping into personal savings isn’t always ideal, but if you have a decent nest egg, you may feel comfortable relying on savings should a pet emergency occur.

Advantages	Disadvantages
If your pet remains healthy, your personal savings won’t take a hit.	It’s challenging to predict the cost of a pet emergency, so you may not have enough saved up.
If you never incur a medical expense, you’ll have saved on pet insurance premiums.	If you need the funds for a personal expense, you may have to decide between covering your pet’s expense or yours.

Veterinary Financing Programs

Vet offices often accept financing options like CareCredit for expenses such as appointments, pet surgeries, emergencies, and medication. If you find yourself in a bind, you can apply for the card to cover the cost. Some vets may also offer payment plans with little to no interest.

Advantages	Disadvantages
If your pet never faces a medical emergency, you will have saved on pet insurance premiums.	Your vet office might not offer payment plans or accept CareCredit, which could leave you forced to pay the full out-of-pocket cost.

Pet-Specific Emergency Funds

If  you want to use your own savings, you can create a savings account specifically for your pet. That way, if an unexpected expense pops up, you’ll have some funds ready to go.

Advantages	Disadvantages
If your pet remains healthy, you’ll have leftover funds.	It’s challenging to predict the cost of a pet emergency, so you may not have enough saved up.
If your pet never faces a medical expense, you’ll have saved on pet insurance premiums.

Low-Cost Clinics

To save some cash on pet expenses, you can utilize low-cost-clinics. Veterinary colleges, pet-related service organizations, and local shelters often provide low-cost clinic options for both emergency and routine care.

Advantages	Disadvantages
Out-of-pocket expenses to utilize a low-cost clinic may be cheaper than the cost of pet insurance.	There is no guarantee a low-cost clinic will have availability to help your pet should you need it. If an emergency arises and low-cost clinics don’t have availability, you may be forced to visit a more expensive vet.
	Some low-cost clinics are only available to low-income pet owners. If your income changes throughout your pet’s life, you may not qualify for care at a low-cost clinic.

Borrowing Money

In a pinch, you could borrow funds from a generous family member, friend, or lender. 

Advantages	Disadvantages
If your pet stays healthy, you’ll save on pet insurance premiums.	It could take time to source the funds or be approved for a loan, which doesn’t bode well for a pet in an urgent medical situation.
	You will incur debt to cover your pet’s expenses.
	If you are unable to borrow or qualify for a loan of the full amount needed, you may have to dip into personal savings. If you lack personal savings, you may be forced to put the remaining balance on a credit card, which can quickly rack up interest costs.

The Cost of Being Uninsured

Relying on savings, low-cost clinics, and loans isn’t necessarily a bad thing, but there are risks you should be aware of.

Lack Of Coverage On Certain Conditions

Pet insurance does not cover pre-existing conditions. If your uninsured pet develops a condition, and you now want to purchase insurance, expenses related to that condition won’t be covered as it’s now considered a pre-existing condition. If you wait to insure your pet, you may run into this issue.

Cost Of Emergency Vet Visits

Pets can be somewhat unpredictable. If Fido decides to swallow a sock, a quick trip to the emergency vet could run you upwards of $800 to $1500 – quite a bit to have in savings or borrow from a friend. 

Peace Of Mind In Emergency Situations

Pet insurance gives you guaranteed coverage on certain expenses, regardless of the vet office you attend. If you rely on alternatives, you may wind up scrambling for a solution in an emergency situation. This can add pressure to an already stressful situation.

Cost-Benefit Analysis

Let’s say you have a small dog whose life expectancy aligns with the norm – around 11 years. With Accident-Only pet insurance, you’d pay around $2,630 in pet insurance premiums over the course of their lifetime.

$19.93 per month x 132 months of life* = $2,630

*This does not factor in the predicted increase in premiums due to age.

Just one emergency surgery for your little pup could cost between $1,800 and $3,000. Given that 1 in 3 pets need emergency vet treatment each year, the odds aren’t quite stacked in your favor when it comes to avoiding high-cost medical care.

Paying a couple thousand dollars in premiums pales in comparison to the potential out-of-pocket costs across a pet’s lifetime.

The Final Verdict: Is Pet Insurance Worth It?

It depends.

You should consider purchasing pet insurance if:

• Your pet is young and healthy.
• You couldn’t afford a high vet bill.
• The cost of the premiums is affordable for you.
• Having insurance will ease your mind.

You may want to opt for an alternative if:

• Your pet is older.
• Affording medical expenses would be a drop in the bucket.
• The potential of purchasing a plan you may never use outweighs the risk of a hefty vet bill.