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The love of a pet may be priceless, but a visit to the vet can be expensive. When your pet has a medical emergency, a serious illness or just needs a checkup, pet insurance can help make the cost of medical care manageable. Pet insurance covers eligible expenses from visits to the vet, but exactly what's covered can vary widely from one policy to another.
How Does Pet Insurance Work?
Similar to health insurance for people, pet insurance helps pet owners pay the cost of medical care for their animals. You buy a policy from an insurance company, pay premiums and file claims when your pet visits the vet for covered care. In most cases, you pay the vet out of pocket; the insurance company reimburses you for a portion of the bill, minus any deductible.
Here are some important terms to know when considering pet insurance.
Premiums are the amount you pay for pet insurance coverage. On average, pet accident and illness insurance costs $640 annually for dogs and $387 for cats, data from the North American Pet Health Insurance Association shows. Premiums can vary depending on factors including the type and breed of pet, your pet's age and general health, your location and the coverage you choose.
Pet insurance doesn't cover all the costs when you file a claim. You'll have to pay a pet insurance deductible, typically ranging from $100 to $500, which gets subtracted from the amount your insurance covers. Deductibles may be annual or per-treatment.
Some pet insurance policies reimburse you a set amount for specific types of treatment (such as $80 for X-rays). Others reimburse a percentage of your costs, expressed as a reimbursement rate. Reimbursement rates generally range between 60% and 90%, although some plans offer 100% reimbursement. If your policy reimbursement rate is 90%, insurance pays 90% of covered costs and you pay the remaining 10% (plus your deductible).
Coinsurance and reimbursement rates are flip sides of the same coin. Coinsurance refers to the percentage of costs you're responsible for, and usually ranges from 0% to 40%. In a plan with 10% coinsurance, you pay 10% of a claim's costs (plus any deductible) and the insurer pays 90%.
Pet insurance doesn't cover care immediately after you purchase a policy. Typically, there's a waiting period of about two days for accidents, two weeks for illness and six months for orthopedic issues.
Many pet insurance policies limit how much they'll pay out. These caps may be annual limits, per-incident limits or lifetime maximums.
Pet insurance generally doesn't cover pre-existing conditions and may also exclude chronic illnesses or hereditary health issues common to specific breeds. If your pet gets an illness (such as cancer), a policy may cover it the first year, but consider it a pre-existing condition (and not cover it) when the policy is up for renewal. Check policy details for other exclusions.
Which Pets Does Pet Insurance Cover?
Pet insurance usually covers dogs and cats, although some plans exclude certain breeds or charge more for them. "Exotic" pets are rarely covered. This includes small mammals such as guinea pigs, ferrets and rabbits; birds; amphibians and reptiles. Nationwide is one company that sells exotic pet insurance. PetAssure offers a wellness plan for exotic pets, although this won't cover medical emergencies or illnesses.
What Does Pet Insurance Cover?
There are three basic kinds of pet insurance: accident-only insurance, accident and illness coverage, and wellness coverage.
Accident insurance covers treatment for accidents or injuries, such as being hit by a car, eating rocks or poison, tearing a ligament or being stung by a bee. It doesn't cover illnesses, pre-existing conditions or preventive and routine care, such as vaccinations.
Accident and Illness Coverage
In addition to accidents and injuries, this insurance also covers short- and long-term illnesses, such as ear or skin infections, cancer, diabetes, arthritis or digestive issues. It doesn't cover pre-existing conditions or preventive and routine care.
If you want help paying for preventive care and routine vet visits, you can purchase separate wellness coverage. This typically covers things like vaccinations, dental cleanings, check-ups and treatment or prevention for fleas, ticks and heartworms.
The specific treatments, procedures and conditions covered can vary from one plan to another. For example, some plans may cover X-rays, blood tests or prescription drugs while others may not.
How to Buy Pet Insurance
Follow these steps to buy pet insurance:
1. Determine the Coverage You Need
Do you want wellness, accident-only or accident and illness coverage? Even within the same type of policy, what's covered may vary widely from one insurance carrier to another, so it's helpful to make a list of the specific concerns you want covered. For example, if your pet has a habit of eating rocks, you'll probably need accident insurance to cover accidental ingestion of foreign objects. Your vet can tell you what health issues are common for your pet breed.
2. Research Pet Insurance Carriers
See if your existing home insurance or auto insurance carrier offers pet insurance. You can also search online for pet insurance companies, ask your vet and fellow pet owners for recommendations, or visit the North American Pet Health Insurance Association (NAPHIA)'s list of member companies.
3. Compare Coverage and Quotes
You can get price quotes from individual insurers or use a site like Petted.com to compare quotes from a variety of companies. When evaluating pet insurance policies, consider:
- What's excluded
- How pre-existing conditions are defined
- Waiting periods
- Coverage maximums or caps
- How you'll be reimbursed
- Whether deductibles apply annually or per-incident
4. Buy a Policy and Enroll
You can usually purchase pet insurance and enroll your pet online. Just provide information such as the type and breed of animal, your pet's age and your ZIP code. Pet insurance policies usually renew annually; you can typically pay the annual premium all at once or pay in quarterly or monthly installments.
How to Save Money on Pet Insurance
Pet insurance can be pricey, especially if you have multiple pets. Fortunately, there are ways to save money on pet insurance.
- Choose a higher deductible. In general, higher deductibles mean lower pet insurance premiums.
- Select a lower reimbursement rate. Reducing your reimbursement rate can also reduce your premiums. If you feel comfortable potentially footing a larger portion of the bill for pricey treatments such as chemotherapy, you could reduce your reimbursement rate and save each month.
- Get insurance early. Because older pets are more prone to health issues, insurance companies may not offer insurance for animals over a certain age. Younger pets are less likely to have pre-existing conditions that will be excluded from coverage.
- Avoid unnecessary coverage. Budgeting for preventive veterinary care could eliminate the need for wellness coverage. You might also save by purchasing standalone coverage for specific illnesses, such as cancer.
- Ask about discounts. Insurers may offer discounts for bundling pet insurance with your home or auto insurance policy or insuring more than one pet. You may get discounts through your job, a membership organization, as a military servicemember or first responder, or as a health care or animal care worker. Service or therapy dogs, pets adopted from a shelter, spayed or neutered pets and microchipped pets may also qualify for pet insurance discounts. Paying your annual premium in full or paying online could earn a discount, too.
Do You Need Pet Insurance?
Is pet insurance necessary? On average, routine and preventive veterinary care costs $485 annually for a dog and $365 for a cat, according to the ASPCA. Surgery for a pet can cost $1,500 to $7,000 or more; even treating a common urinary tract infection can cost $300 to $1,500, according to Yelp data. Such unexpected expenses can put a big dent in your bank account, but you'll need to consider the annual premiums, the deductible and your reimbursement rate to see if pet insurance is worth the cost.
Suppose your plan has a $500 annual premium, a $200 deductible and reimburses 90% of covered costs. When you file a claim for a $1,000 vet bill, here's what you'd get:
$1,000 x 90% = $900
$900 - $200 deductible = $700 reimbursed to you
Subtracting the $500 annual premium, you're ahead by $200.
On the other hand, a claim for a $500 vet bill would work like this:
$500 x 90% = $450
$450 - $200 deductible = $250 reimbursed to you
Subtracting the $500 annual premium from $250, you've spent $250 more on pet insurance than you've received from the coverage it provides.
However, math isn't the only consideration. Pet insurance could make sense for you if:
- Your pet is older. If your pet isn't too old to qualify, insurance can help cover the cost of illnesses like arthritis or cancer that often affect older pets.
- Your pet could have breed-specific health problems. Assuming your pet doesn't yet show signs of the condition and you can find a policy to cover it, pet insurance can pay to treat breed-related problems, such as respiratory issues common to bulldogs, pugs and other short-nosed dogs.
- You couldn't otherwise afford to cover a major veterinary expense. If your pet gets cancer or is hit by a car and needs major surgery, pet insurance can make the difference between saving their life and having to put them down.
Keep in mind that even with pet insurance, you'll need to pay out of pocket for vet care and wait to get reimbursed. Building a solid emergency fund can help you cover unexpected veterinary expenses until your insurance payment arrives. You could even start a separate savings account to help cover the cost of pet care.
Do I Need a Good Credit Score for Pet Insurance?
Because pets are legally property, pet insurance is categorized as property and casualty insurance, just like car and home insurance. In some states, insurance companies can check your credit-based insurance score when you apply for auto or home insurance. Do they do the same for pet insurance?
Even NAPHIA and the National Association of Insurance Commissioners don't say with certainty whether pet insurance providers check this credit score—although depending on where you live, it's possible.
But even if insurers weigh your credit-based insurance score before issuing pet insurance, your pet's age, health and breed and your coverage levels will have a bigger impact on the cost of pet insurance than your credit will.
The Bottom Line
Personal loans and credit cards are other options for paying a big vet bill. A good credit score can help you get favorable interest rates on these and other types of credit. Just as you take care of your pet's health, make it a habit to monitor the health of your credit. Experian's free credit monitoring service can help you keep tabs on your credit report, track your credit score and get alerts of important changes that could signal fraud.