What Is Pet Insurance and How Does It Work?

How Does Pet Insurance Work?

Much like health insurance for humans, pet insurance helps cover the cost of medical care for pets. You buy a pet insurance policy from an insurance company, pay premiums and file claims to get reimbursed for covered veterinary care at the clinic of your choice. Here are some pet insurance terms to know.

Annual Premium

Premiums are the amount you pay for pet insurance coverage. Your premiums may vary depending on factors including the type and amount of coverage you buy; your pet's breed, age and general health; and your location.

Deductible

When you file a pet insurance claim, you're responsible for paying a deductible, which generally ranges from $0 to $1,000. Your policy may have a per-treatment deductible or an annual deductible.

Reimbursement Rate

Some pet insurance policies reimburse you a set amount for specific veterinary treatments, such as $80 for X-rays. Others reimburse a percentage of your expenses, expressed as a reimbursement rate. Most pet insurance plans have reimbursement rates of 60% to 90%, but some reimburse 100% of covered costs.

Example: If your policy reimbursement rate is 80%, pet insurance pays 80% of covered costs and you pay the remaining 20% (plus any deductible).

Coinsurance

Coinsurance is the percentage of costs you're responsible for. (Think of it as the flip side of your reimbursement rate.) If your plan has a 90% reimbursement rate, your coinsurance is 10% of covered costs (plus any deductible).

Waiting Period

After you buy pet insurance, there's generally a waiting period during which veterinary care isn't covered. Waiting periods can vary, but common waiting periods are two days for accident coverage, two weeks for illness coverage and six months for coverage of orthopedic problems.

If you buy pet insurance with a two-week waiting period and your dog gets sick three days after you purchase your policy, insurance won't cover the vet visit or any related care.

Policy Caps

Pet insurance policies often limit, or cap, the total amount they'll pay out. Depending on your policy, these may be annual limits, per-incident limits or lifetime maximums.

Tip: Even with pet insurance, be prepared to pay the vet at your visit. Although some pet insurance policies pay veterinarians directly, most require paying the vet bill upfront and submitting a claim for reimbursement.

Which Pets Does Pet Insurance Cover?

Most pet insurance policies cover dogs and cats; exotic pets typically aren't covered. Exotic pets generally include birds; amphibians, lizards and reptiles; miniature pigs and goats; and small mammals such as guinea pigs, ferrets and rabbits.

Nationwide is one company that offers exotic pet insurance. Another option is the PetAssure veterinary discount plan, which covers all types of animals, including exotic pets. You'll receive discounts from participating veterinarians on treatment including wellness care, dental cleanings, cancer treatment, emergency care, surgery and hospitalization.

Learn more: How to Get Exotic Pet Insurance

Types of Pet Insurance Plans

There are three basic types of pet insurance: accident-only insurance, accident and illness coverage, and wellness coverage.

Accident-Only Coverage

Accident-only insurance covers veterinary care for accidents or injuries, such as eating poison, being hit by a car, tearing a ligament or being stung by a bee. It doesn't cover illnesses, preexisting conditions or preventive care.

Accident and Illness Coverage

In addition to accidents and injuries, this insurance covers short- and long-term illnesses, such as skin or ear infections, diabetes, cancer, diabetes, arthritis or digestive problems. It typically doesn't cover preexisting conditions or preventive care.

Wellness Coverage

To help pay for preventive care and routine vet visits, you can typically add wellness coverage to your policy or purchase a standalone wellness plan. Pet wellness plans generally cover things like check-ups, dental cleanings, vaccinations and treatment or prevention for fleas, ticks and heartworms.

Learn more: What's the Difference Between Pet Insurance and a Wellness Plan?

What Does Pet Insurance Cover?

Although coverage may differ depending on your plan, pet insurance usually covers the following.

What Doesn't Pet Insurance Cover?

Pet insurance usually doesn't cover the following.

• Accidents or illnesses during the waiting period
• Preexisting conditions your pet had before your policy became effective, even if not diagnosed by a vet at that time
• Cosmetic or elective procedures such as ear cropping or declawing, unless medically necessary
• Grooming equipment or services such as bathing or nail trims
• Experimental treatments such as cloning
• Breeding-related procedures or health problems
• Preventable injuries due to abuse, neglect or illegal activities
• Long-term prescriptions for pet food or supplements
• Expenses unrelated to veterinary care, such as bank fees or taxes

Tip: Pet insurance doesn't cover you if your pet bites someone or causes property damage. This is typically covered by homeowners or renters insurance.

How Much Does Pet Insurance Cost?

The average annual cost of pet insurance is $110 to $386 for cats, and $193 to $749 for dogs, according to the North American Pet Health Insurance Association (NAPHIA). Premiums tend to rise as your pet gets older and more likely to suffer chronic or serious health issues.

Source: North American Pet Health Insurance Association, 2024 data

If pet insurance sounds pricey, compare it to the average costs of common veterinary procedures, according to November 2025 Yelp data:

• Emergency care: $800 to $3,000
• Dental extraction: $500 to $3,000
• Urinary tract infection: $300 to $1,500
• Hospitalization: $600 to $3,000
• Emergency surgery: $1,500 to $7,000
• Chemotherapy: $3,500 and up

Tip: Paying pet insurance premiums monthly can be easier on your budget; however, many providers offer discounts for paying annually.

Learn more: Most Pet Owners Who Have Pet Insurance Say It's Worth the Cost

How to Buy Pet Insurance

Follow these steps to buy pet insurance.

1. Decide What Kind of Coverage You Need

Determine if you need wellness, accident-only or accident and illness coverage. Listing the specific concerns you want covered can help you decide. For example, if your dog frequently raids the trash can, you'll probably want insurance that covers accidental ingestion of foreign objects. Your vet can advise you on the health problems likely to affect your pet.

2. Research Pet Insurance Providers

If your home insurance or auto insurance carrier sells pet insurance, bundling policies could save you money. You can also search online for pet insurance carriers, ask your vet and fellow pet owners for recommendations, or check NAPHIA's list of member companies.

Tip: Mainstream pet insurance covers dogs and cats, but you'll need to buy exotic pet insurance if you have an exotic pet.

3. Get Quotes and Compare Coverage

You can get insurance quotes from individual insurance carriers or use a comparison site to gather multiple quotes. When comparing pet insurance policies, consider:

• Exclusions
• Waiting periods
• Coverage caps
• How preexisting conditions are defined
• Reimbursement rate and process
• Deductible amounts and whether they apply annually or per-incident

Tip: When comparing coverage, be sure to review a sample policy and list of covered prescription medications. You can typically find this information on the website or request it from the insurer.

4. Pay Your Premium and Enroll

You can usually buy pet insurance and enroll your pet online by providing information such as your pet's species, breed and age and your ZIP code. Policies typically renew annually.

Learn more: Pet Insurance Mistakes to Avoid

How to File a Pet Insurance Claim

Each insurer has their own process for filing a pet insurance claim, but it generally works like this:

1. Submit your claim. You can typically submit claims using the insurance company's mobile app or website, by email, by fax or by mail. Check with your insurer to see if there's a time limit for filing claims.
2. Provide documentation. This may include an itemized invoice, medical notes from the vet and a copy of your receipt.
3. Await a decision. The insurance company reviews your claim and may request more information. You can usually track your claim status in your account online or in the mobile app.
4. Receive payment. When your claim is approved, you can typically opt to be reimbursed via check or direct deposit.

Learn more: What Is an Insurance Claim?

Frequently Asked Questions

The Bottom Line

A good credit score can help qualify you for favorable terms on personal loans or credit cards—both other options for paying a big vet bill. As you monitor your pet's health, be sure to keep tabs on your credit health too. Consider signing up for Experian's free credit monitoring service. It tracks your credit score and alerts you of important changes that could signal fraud.