Pet insurance

How does Pet Insurance Work?

Introduction

In 2022, 5.36 million pets in the United States had insurance, and most of them were covered by accident and illness plans for more extensive coverage.

Most pet insurance plans will pay you back after you settle the vet bills, but some plans, like Trupanion, work with veterinarians and will pay your vet directly.

Depending on your pet insurance coverage, your policy may cover regular care, accidents, breed-specific conditions, and illnesses like allergies, cancer, and arthritis.

The North American Pet Health Insurance Association (NAPHIA) reported that the number of insured pets in the United States increased to 5.36 million in 2022, from 4.4 million in 2021. Of those insured pets, 80.1% were dogs and 19.9% were cats. Most owners opted for comprehensive insurance plans, with 92.8% of pets being covered by accident and illness plans or embedded wellness plans.

Pet insurance is still a relatively new industry, but it can help families by reducing some of the veterinary costs related to pet ownership. But what does pet insurance cover? And how does pet insurance work? Learn more about pet health insurance below to see if it’s worth it for your furry family members.

What is Pet Insurance all About?

Pet insurance is a health plan that the owner pays for on a monthly or annual basis in return for reimbursement of eligible veterinary expenses. When a pet visits a veterinarian for a covered condition, the owner pays the vet in full and then submits a claim to their insurance company for reimbursement, which is determined by the terms of the policy. Most pet insurance plans are for dogs and cats, but some pet insurers offer coverage for other animals. Nationwide has policies for birds, reptiles, and other exotic pets, while ASPCA Pet Health Insurance has plans that cover horses.

There are usually three types of pet insurance plans to choose from.

An accident-only plan will pay for eligible veterinarian bills related to accidents such as broken bones or ingesting foreign objects.

An accident and illness plan covers both types of veterinary care, giving the owner more wide protection but at a higher cost. Illnesses may include infections, cancer, arthritis, diabetes, and allergies.

Routine wellness or preventative care plans, offered by some carriers as an optional add-on or separate plan, pay for things like vaccinations, flea treatments, and spay/neuter.

Deductibles, coverage limits, premiums, and the like can differ by insurer. Find out more about various pet insurance plans and companies in our Best Pet Insurance Companies ratings.

How Does Pet Insurance Work in 2024?

Pet insurance mostly works on a reimbursement basis. This means that you pay the vet first and then file a claim for the reimbursement of eligible expenses. Some companies, like Trupanion, collaborate with certain veterinarians, paying them directly so you only have to pay ineligible costs out of pocket.

When buying a pet insurance policy, you choose a deductible, a reimbursement percentage, and an annual limit, which all affect your premium and the maximum amount you can get back. Your deductible has to be met before the insurance company will issue reimbursement. The eligible costs are then reimbursed based on the percentage you choose, usually 70% to 90% of the cost, and the policy’s annual limit also sets the maximum dollar amount you can claim each year. Some insurance companies offer an unlimited annual limit option.

Although claims filing and reimbursement processes can differ, it usually works like this:

  • Book a vet appointment.
  • Pay for the veterinarian bills in full.
  • Take your pet to see the veterinarian.
  • File a claim online or through the pet insurer’s mobile app and attach a copy of the bill.
  • Once the pet insurance company approves the claim, get your allowable reimbursement via direct deposit or paper check in the mail.

The review and approval process can take anywhere from a few days to a few weeks or even a month, depending on the company, the policy, and the extent of the accident or illness.

Where Can You Make Use of Pet Insurance?

Most pet insurance plans operate on a reimbursement basis, so you can use your coverage with any licensed veterinarian, specialist, or emergency clinic of your preference. Unlike human health insurance, pet health insurance doesn’t have provider networks. However, some companies may have certain criteria to fulfill in order for veterinarian bills to be eligible for reimbursement.

What Does Pet Insurance Cover?

What pet insurance covers depends on the plan you select:

Pet insurance

  1. Accident only: Covers veterinarian expenses for accidents, such as ingesting objects, getting attacked by another animal, broken bones, and cuts.
  2. Comprehensive plan: Covers accidents and illnesses, potentially including allergies, cancer, hereditary conditions, surgery, hospitalization, breed-specific conditions, and arthritis.
  3. Routine care: Covers preventative expenses, like dental cleaning, vaccines, annual checkup exam fees, blood work, and spaying or neutering, and is also called a pet wellness plan.

No matter which pet insurance plan you select, pre-existing conditions are usually excluded from coverage. However, some companies have a waiting period for some pre-existing conditions and will provide coverage if your pet is symptom-free for a set amount of time, such as six or 12 months. Other companies will not provide any coverage.

Pet insurance plans usually have a waiting period for accidents and illnesses. The waiting period is the time between the policy being activated and the coverage taking effect. For example, if a policy has a 14-day waiting period for illnesses and your policy takes effect on the first of the month, illness visits aren’t eligible for reimbursement until the 15th.

Waiting periods for accidents and illnesses are relatively short compared to those for pre-existing conditions. Although you can’t bypass the waiting periods, the sooner you get your pet covered, the less likely you’ll have a claim denied due to the waiting period and the sooner you may have coverage for pre-existing conditions.

What Does Pet Insurance Not Cover?

The main veterinarian expenses not covered by pet insurance are pre-existing conditions, non-vet related expenses, and regular care, unless you have purchased a routine or wellness plan. Specific examples include:

  • Breeding
  • Pregnancy
  • Cosmetic procedures such as ear cropping, removing dew claws, and tail docking
  • DNA testing
  • Accidents or illnesses caused by fighting, racing, cruelty, or neglect
  • Elective procedure
  • Preventative procedure
  • Experimental treatments

Everyday expenses of owning a pet are also not covered, like pet food, toys, vitamins, grooming, and boarding fees. However, some carriers, like Embrace, will cover prescription food if you have a wellness plan. There are also some carriers, like Fetch, who may cover boarding fees if the policyholder has to be in the hospital for a long period of time, typically four or more days.

How Does a Pet Insurance Deductible Work?

Pet Insurance policies, like most insurance policies, have a deductible. Deductibles, depending on your choice, will affect your premium. Lower deductibles generally increase your premium while higher deductibles will lower your premium.

There are typically two options for deductibles. Annual deductibles, like those used by Embrace, are similar to those on a human medical insurance policy. Once the deductible has been met, no deductible will apply to future claims during the policy term.

Other carriers may offer a per-incident (per-condition) deductible. In this case, the deductible will be applied each time your pet visits the veterinarian for a new condition. This type of deductible could result in you receiving less reimbursement for each claim.

It is important to ask how your deductible will apply to the policy you are considering for purchase.

How Much Does Pet Insurance Cost in 2024?

In recent year, the average premiums for accident and illness policies for dogs and cats were approximately $49 per month and $29 per month, respectively, as reported by the North American Pet Health Insurance Association (NAPHIA). However, you may find a pet insurance plan that fits your needs for much less.

According to our Best Pet Insurance Companies of 2024 rating, Astralhubs will provide list of the cheapest insurance for dogs with a sample monthly cost of $19.44 and for cats with a monthly cost of $11.00. The most expensive companies, on the other hand, are Nationwide for dogs at $56.74 per month and Trupanion for cats at $30.88 per month.

Factors that influence the Cost of Pet Insurance

  • Your ZIP code
  • The type of pet you have
  • Your pet’s age
  • Your pet’s breed
  • Your pet’s size
  • The pet insurance deductible
  • The reimbursement percentage
  • The type of coverage plan you select
  • The annual limit
  • The optional add-ons you may select
  • The company you choose

Do You Need Pet Insurance Now?

Pet insurance

Whether you need pet insurance is up to you. When considering the cost of vet care versus average pet insurance premiums, pet insurance may be worth it for your pet, family, and financial situation.

For example, you could pay $3,000 or more if your pet is hospitalized. If you are paying $30 a month, or $360 per year, for pet insurance, then you may be saving money. In this scenario, you would have to pay your pet insurance premium for just over eight years to make a $3,000 hospitalization claim not worth it.

Additionally, having a breed that is more prone to certain health conditions, such as hip dysplasia, can result in more vet or specialist visits and, thus, more expenses that may be reimbursed by a pet insurance plan.

If you already have a vet that you work with and trust, it may be worth taking the time to ask about expected costs for certain procedures for accidents or illnesses. Compare those costs to various quotes and reimbursement percentages from pet insurers to help you decide if you need pet insurance. I recommend you get a free quote from Odie one of the Best pet insurance company that will serve you well and it’s Free to get started.

Does Pet Insurance Cover Any Pets Besides Cats And Dogs?

Most pet insurance companies only cover cats and dogs, but there are some companies that cover other types of pets as well. Nationwide has avian and exotic pet insurance, which covers small mammals, birds, reptiles, and amphibians. ASPCA offers pet health insurance for horses.

Does Pet Insurance also Cover Dental for Pets?

Dental care is usually regarded as routine and, therefore, is not covered by most pet insurance plans. However, some may cover dental removals or surgery if caused by a covered accident, such as your dog cracking a tooth while playing with a toy and needing it surgically taken out. Additionally, some companies with pet wellness plans cover dental hygiene.

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