What is Pet Insurance and How Does it Work?

What is Pet Insurance and How Does it Work?

by Scritch

Many people consider their pets to be family, but when they get sick veterinary care can be very expensive. That’s why pet insurance continues to become more common among pet loving households. Not only does it provide peace of mind, but it’s practical in today’s age where veterinary care continues to advance (and so do the costs!). Some may delay purchasing pet insurance with the assumption that pets don’t face serious health problems until they’re much older. But pets of all ages – especially kittens and puppies — find themselves in plenty of mischief and can develop unexpected health conditions at any age. Here’s what you should know about pet insurance.

What is pet insurance?

Pet insurance is for those unexpected accidents and illnesses you just can’t plan for, such as an injury or chronic conditions like diabetes, kidney disease, or arthritis. As veterinary care advances, vet bills that reflect these improvements can be more expensive, and pet parents are often caught off guard when an injury or illness occurs. Pet insurance can help mitigate these costs and greatly reduce the financial burden of unexpected veterinary care.

How does it work?

Pet insurance helps with vet bills when a new illness or injury occurs (no pet insurance company cover pre-existing conditions). It works differently than human healthcare plans as pet insurance is reimbursement based, which works in favor of pet parents since it allows you to use any licensed vet, emergency clinic or specialist in the U.S. and you don’t have to worry about being “in-network”.

Purchasing pet insurance: When you sign up for your pet insurance plan, you get to choose your reimbursement rate which typically ranges from 70%-90% (meaning that your coinsurance, the amount of the vet bill that you will be responsible for, will be between 10-30%). You also pick your deductible, which can either be annual or per incident (annual is the most common and typically ranges between $100-$500).

Using your pet insurance: When your pet becomes sick or hurt, you take them to the vet and have them treated, pay the vet bill, then submit your claim to the pet insurance provider for reimbursement. To calculate the amount of reimbursement, the insurance provider subtracts the costs for which you are responsible: your deductible and coinsurance. The provider sends you a check or direct deposit for the remainder of the bill. Some companies can offer payment directly to the vet, so you only have to cover your portion up front.

Understanding the terminology

Different companies and plans offer different types of coverage. Some variables to research include:

  • Reimbursement level: This is the percentage of the vet bill you can expect the insurance company to cover (after your deductible has been met). You can typically choose from 70, 80, or 90 percent reimbursement levels. Note: higher reimbursement levels result in a more expensive monthly premium.
  • Deductible: In addition to your coinsurance, you’ll be responsible for covering a deductible either annually, per incident or per condition. When the deductible has been reached, reimbursement kicks in. Most companies offer a range of deductible options so you can choose what best fits your budget. A lower deductible is associated with a higher monthly premium.
  • Payout limits: During your research, you may find maximum payout caps per incident, per year or over the lifetime of the policy, as well as plans with no limits at all. By choosing a plan that has no limits on payouts, you know that you’ll be covered even if your pet develops a chronic or expensive condition.
  • Coverage exclusions: Understand what is excluded by the policy. Are there breed-specific exclusions? Does it cover genetic and hereditary conditions?

Other exclusions: It is important to know that no pet insurance company covers pre-existing conditions. This is why it’s recommended to enroll your pet while they are healthy and before any potentially expensive veterinary care is needed. While many policies don’t cover wellness care (such as annual vet visits for an exam, vaccines and flea or tick treatment) or dental care, there are some companies that do offer plans to cover these expenses. However, the extra cost to include those treatments can be as much as or more than paying the vet directly for those same services.

Comparing pet insurance

When shopping around for pet insurance, it’s important to understand your options and weigh the pros and cons. Many providers offer a sample copy of their policy on their website, or you can call and request one. Check out review sites like CanineJournal.com, PetInsuranceQuotes.com and Consumer’s Advocate to see how companies and plans compare. Some things to look for in a pet insurance policy:

  • Offers comprehensive coverage for accidents and illnesses
  • Reimburses you based on what you’re actually paying at the vet’s office instead of a benefit schedule that shows how much they think the treatment for a specific condition should cost
  • Has an easy and fast claims process
  • Has no limits or caps on payouts
  • Has excellent customer reviews

For most pet parents, pet insurance has been a great way to save money and relax the anxiety when it comes to expensive, unpredictable accidents and illnesses. And since pre-existing conditions are not covered, it’s recommended that you get an insurance policy for your pet before an accident or illness happens. Enroll early and your dogs and cats will be covered throughout all of life’s adventures.