Pet insurance is an insurance policy bought by a pet owner which helps to lessen the overall costs of expensive veterinary bills. This coverage is similar to health insurance policies for humans. Pet insurance will cover, either entirely or in part, the often expensive veterinary procedures. Evaluating and comparing pet insurance plans is necessary in order to find the right plan for you.
As with human health insurance, there is usually a deductible, which is an out-of-pocket expense before the coverage begins. Most providers will base the amount of the insurance premium on the average cost of veterinary care in the owner’s region. Also, the policy may not cover all veterinary procedures.
Average Veterinary Care Costs
The connection between humanity and animals stretches back into the dawn of history as humans have taken them into their homes and hearts. In many cases, pet owners see their pets in the same way they see their children. Progress in veterinary science allows owners to seek out many procedures for their animals that were previously for humans only. These procedures can be expensive. A June 2022 article from Better pet stated that an average emergency exam costs $100-$200 and an overnight stay costs averages between $1,000-$2,000.
Primary pet care includes annual exams and vaccines, blood work, and dental cleanings. However, there is explosive growth in specialized areas of pet care such as neurology and oncology. Also, pets may have medical emergencies, just like their human owners. According to the ASPCA, the 2021 annual costs for routine medical costs (vaccines, wellness visits, etc.) ranges from $160 to $220.
For some potential pet owners, the prospect of high medical expenses can be a deterrent to adopting a pet. Additionally, for those who do adopt, the possibility of expensive procedures and medicines can lead to a decision to put a pet down, known as “economic euthanasia.”
How Much Does Pet Insurance Cost?
To help with yearly costs and unexpected emergencies, a pet owner can buy a policy that will save some out-of-pocket expenses. As with human healthcare insurance, a pet owner will pay a yearly or monthly premium. Some of the factors impacting the cost of pet insurance include:
- Species—Dogs usually cost more than cats because they are bigger and more claims are submitted for them.
- Breed—Some breeds are predisposed to certain illnesses and injuries.
- Gender—Statistically, more claims are submitted for males than females, so females cost less.
- Age—The older the pet, the costlier the insurance, thanks to the ravages of age.
- Location—Insurance costs more in major metropolitan areas than it does in the suburbs and rural areas.
The 2022 State of the Industry Report from the North American Pet Health Insurance Association (NAPHIA) stated that the average annual premium for pet insurance (accident and illness) in the U.S. in 2021 was $584 per year for dogs and $343 for cats.
The gross written premium (in-force) for dogs was $2.3 billion and $300 million for cats.
According to NAPHIA, the average co-pay is 80% of the amount you claim, but some companies advertise that they offer 90% or even 100% coverage on some procedures.
For young pets who typically only need yearly checkups, the cost of insurance may outweigh the cost of services. However, should an emergency arise, the cost of veterinary care could surpass the insurance premium. Also, as senior pets usually need more procedures, the coverage could save money, whether there is an emergency or not
The number of American households that own a pet, according to a 2021-2022 American Pet Products Association (APPA) survey.
History of Pet Insurance
Pet insurance began in Sweden in 1890, but it didn’t reach our shores until 1982, when the canine screen star Lassie received the first pet insurance policy in the U.S.78 Since that beginning, the popularity of the product has grown. According to NAPHIA, 4.0 million pets were insured across North America in 2021.
Is Pet Insurance Worth the Price?
Even a healthy pet has necessary expenses that a new owner must cover. Consider this hypothetical example. When the Fosters adopted Rufus, an adult rescue dog, they knew that they would have some expensive first-year costs. They knew the dog would incur medical and preventative costs, such as routine medical treatment (vaccines, wellness visits, etc.) ($225 annually), preventative medication (heartworm, flea/tick) ($185 annually), and spaying or neutering ($300).
In total, the Fosters would need to shell out an estimated $710 for their new pet in its first year in their home. If the pet incurred any other issues during the year—such as more blood work, medication, or an emergency visit—the costs would end up being even higher. As the average price for pet insurance in 2021, as noted above, was $584, paying the insurance in the first year of owning Rufus made sense to the Fosters.
Some more information regarding pet insurance
Pet health insurance works in a similar manner to human health insurance policies, in that they both include annual premiums, deductibles, co-pays and caps.
Health insurance is available for all types of pets, including dogs, cats, rabbits, ferrets, exotic birds, reptiles, potbelly pigs and various rodents.
Cost of coverage is based typically on the animal’s age, health profile and the level of care you choose. Generally, older animals cost more to cover—and some companies have age limits. Also there may be exclusions for pre-existing conditions, and some insurers may not cover certain breeds that are prone to hereditary conditions (e.g. hip dysplasia).
There are three general levels of coverage:
- Basic coverage is the least expensive option. Basic coverage provides the lowest reimbursements for procedures, and will help pay for accidental injuries, poisonings and illnesses (including cancer). These policies typically include an annual deductible, caps on reimbursements per accident or illness, as well as caps on total reimbursements per policy term.
- Comprehensive coverage is costlier than basic coverage, but offers more generous benefits, such as reimbursements for accidental injuries, emergencies and illnesses, and coverage for office visits, prescriptions, diagnostic tests, X-rays and lab fees. These policies feature lower annual deductibles than those for basic coverage, but also cap reimbursements per accident and illness, as well as on total reimbursements for the policy term.
- Pet well care protection reimburses for preventive care, including physical exams, flea and heartworm prevention and vaccinations. While there is no deductible for well care, there is a nominal deductible for other medical services.
While shopping for pet insurance, you may come across veterinary discount plans, which are membership based services rather than an insurance policy. With a veterinary discount plan, the member pays a monthly fee and then is entitled to reduced rates on pet services, medical procedures, prescriptions and products from a specific group of veterinarians who also agree to participate in the plan.
Note that, in the event of a catastrophic and costly pet illness or injury, a discount may be useful but you will likely still be out of pocket for much more than if your pet is insured. Also, unlike pet insurance, veterinary discount plans are not regulated by law.
Life and theft insurance
Life and theft coverage is designed to insure the lives of highly valuable animals, and is typically purchased by zoos or by the owners of championship cats, dogs, horses and police dogs. The policy reimburses owners of stolen animals, and pays a death benefit if an animal dies during transport or other covered events.
General insurance protections
Your current homeowners insurance policy may offer some protections that encompass pets. For example:
- Liability – If your dog bites someone and causes an injury, and you are sued, your homeowners or renters insurance policies provide liability protection to defend you in court.
Be aware that most policies will exclude any dog with a history of biting and aggressive behavior. In addition, many homeowner associations restrict some breeds that are typically thought to be dangerous—and a growing number of communities require owners of these dog breeds to carry additional liability coverage.
- Personal property – Some owners tend to spend a lot of money accessorizing their pets—and these items are covered under the personal property section of standard homeowners and renters policies. So if Fido’s favorite cashmere dog coat is stolen or damaged, you’re covered!
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