What is Pet Insurance?

Pet insurance helps cover the cost of medical expenses should your pet become ill or have an accident. A few plans also cover wellness visits and routine veterinary expenses such as  vaccinations, spaying/neutering, heartworm testing/medications, etc. for an additional fee.

Why Should You Consider Using Pet Insurance?

dog at the vet

Pet insurance can be most helpful for the unexpected – catastrophic medical events that are costly and hard to predict therefore budget for.

Routine and wellness procedures are not always best handled with pet insurance. Sometimes the annual cost of adding routine and wellness care to your plan ends up being more than it would cost you if you paid for these procedures out of your own pocket, so make sure you do the math before you enter into a plan like this.

It is possible that you will pay more in premiums than you get back if your pet stays relatively healthy, therefore pet insurance (like any other insurance) should be used as a risk management tool, not as a way to save money.

cat with pet insurance

How does Pet Insurance Work?

Pet insurance is similar to human health insurance in that it:

Pet insurance differs from human health insurance in that:

dog with pet insurance

How to Select a Pet Insurance Plan

Selecting a pet insurance plan is an individual choice because each person and pet has different needs depending on the animal’s breed, owner’s geographical location and budget.

First, determine if you need pet insurance. If you can cover the worst case scenario costs for your geographic location out of your own pocket, then you may not need pet insurance. Please keep in mind that many emergencies can cost between $3000-$7000. In some cases, emergencies can go over these amounts.

If you determine that you need pet insurance, make sure the pet insurance company you choose has the following attributes:

  1. Has good medical coverage – To get the most comprehensive coverage, you want to purchase a plan that covers accidents/injuries AND illnesses. The illness part of the coverage must include (these are common ailments in veterinary medicine):
        a) Coverage for cancer
        b) Coverage for chronic disease – Chronic diseases are illnesses that have long duration and generally slow progression. Examples include cancer, heart disease, diabetes, and feline immunodeficiency virus.
        c) Continual coverage for chronic disease – This is very important. If you do not get this coverage, the chronic disease will only be covered in the policy year it was diagnosed, and after that you will have to pay for any continuing medications or diagnostic monitoring yourself. To further this point, you will pay the same monthly premium even though you have lost coverage for the disease.

  2. Treatment for most chronic diseases will last beyond the first year of diagnosis, therefore it is important to have coverage in this area. This includes things like allergies, diabetes, Cushing’s disease, kidney disease, hyperthyroidism, osteoarthritis, inflammatory bowl disease and as mentioned before heart disease and cancer.

  3. Company has a good reputation.

  4. Research a pet insurance company’s reputation using the Better Business Bureau and your state’s department of insurance. You can also ask your veterinarian what their clients’ experiences have been

  5. Has a strong underwriter.
    The underwriter is the company that is financially responsible for paying your claim. Use AM Best to research the strength of the underwriter.

  6. Has a maximum payout limit that will cover the worst case scenario costs for your geographic location. The maximum payout limit is the maximum amount of money the insurance company will reimburse you. This payout limit can be annual, lifetime, per incident, per body system, or based on a predetermined benefit schedule. You want to pick a maximum payout structure that will cover the worst case scenario costs.

  7. Has an affordable premium.

  8. Pays claims in a timely fashion.

  9. Does not have unreasonable exclusions and requirements.
    – Exclusions are medical conditions that are not covered by the plan.

    – Requirements are things you must do to remain insured (e.g. annual exams, animal must reside in the place of residence listed on the policy, submission of medical records, and adherence to the vaccination recommendations).

     – Exclusions and requirements are written in the pet insurance company’s terms and conditions. It is important that you read this document before and after you buy so that there are no surprises.

What about Accident Only Policies?

As the name implies, accident only policies cover accidents only. They do not cover medical costs caused by illnesses. 

Accident only policies tend to be much cheaper than comprehensive accident and illness policies because they do not cover costly illnesses.

Also, as a pet ages, the number of accident-related injuries decreases in comparison to the number of illness-related conditions.

In addition, what a pet owner considers to be an accident is not necessarily what a pet insurance company considers to be one. For example, some companies will not cover conditions such as foreign body ingestion or cruciate injuries in their accident only policies.

If you intend to buy an accident only policy, make sure you know what you are getting for your money.

Key Points Regarding Pet Insurance


When you purchase pet insurance, make sure you have a realistic understanding of this and how it can affect you.

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