Is pet insurance really worth it? Let your pet be the judge
What exactly is pet insurance, and do you really need it? That’s a quandary put to many a pet owner who loves their pet as much—in some cases, maybe more—than their spouse, partner, or best friend.
It’s tricky. After all, your pet is not just any old animal, but a living, breathing companion you have come to depend on as much as they rely on you for care, comfort, and fun and games. As anyone who refers to their dog or cat as a “fur baby” can attest, they will do anything to preserve their pet’s health and ensure a long, happy life. After all, that fur baby is family.
- Pet insurance is similar to your health insurance, but on a much smaller scale.
- Your pet may be priceless, but insurance comes with a steep price tag.
- Pet insurance policies do not cover preexisting conditions.
But it can get pricey. The cost of pet ownership can add up quickly for food, licenses, toys, dog walkers, and the like. And health care expenses? That’s a big unknown. Veterinarian checkups, vaccinations, and monthly doses of flea, tick, and heartworm treatments alone can ring up big annual bills. What if your furry friend has a skin condition? Steroids and other treatments aren’t cheap. And the diagnosis of cancer or some other life-threatening disease could require expensive diagnostics, procedures, operations, medications, and after care.
Pet insurance can offer peace of mind that you’ll be covered if the worst happens, but it’s not a given. Policies can vary widely, and the lifetime costs might outpace the price of an emergency. As with every financial decision you make, read the fine print, do the math, and don’t jump in until you fully understand the implications.
What is pet insurance?
Much like your own health insurance, pet insurance pays part or all of the medical bills for your pet, depending on the type of coverage you have. Most insurance is for dogs and cats, but the policies can be as different as night and day depending on your pet’s breed, age, and even what state you live in. Many insurers also offer policies for birds, rabbits, guinea pigs, reptiles, and horses.
Pet insurance was born in Sweden in 1890, when Claes Virgin is said to have written the first insurance policy to cover horses and livestock. It took years before pet insurance gained footing in Europe, and it wasn’t until 1982 that the first pet in the U.S. was insured. That policy was for Lassie, the TV and movie icon collie that Veterinary Pet Insurance—now part of insurance giant Nationwide—says was the first insurance provided for a pet.
If you don’t have pet insurance, don’t be ashamed; few do. Just how many dogs and cats there are in U.S. households is hard to say, but the American Veterinary Medical Association counts roughly 144 million to 151 million. Of those, some 4.8 million are insured, representing a little over 3% of the total dogs and cats in U.S. homes, according to a 2023 state of the industry report from North American Pet Health Insurance Association (NAPHIA).
By NAPHIA’s calculations, the total premium insurance policy volume in the U.S. amounted to about $3.2 billion at year-end 2022. That represents a whopping 157% jump in pet insurance payments since 2018, or more than 20% each year. So, yes, pet insurance is gaining followers, but it has a long, long way to go before it becomes commonplace.
Deductible? Co-pay? Coinsurance?
A medical insurance policy—whether for you or your pet—is full of jargon and confusing terms. Learn about medical insurance types and the language that accompanies them.
There are many things to consider about insuring your pet before you take the leap. Your pet may be priceless to you, but insurance comes with a costly price tag, and what you fork over during your pet’s life for premiums and co-pays could far outweigh even a hefty veterinarian bill.
What does pet insurance cost?
Pet insurance is as competitive as human health insurance, but on a much smaller scale. A growing number of providers are joining the ring, which is a good thing, because it leads to better plans. Pet care costs are also on the upswing thanks to higher prices for medicine, equipment, and overhead combined with a shortage of qualified veterinarians.
Dog owners will pay about $640 per year (about $53 a month) for an “accident and illness” policy, which is the most basic policy, according to NAPHIA. Cat owners pay less at $387 annually, or $32 monthly. But that’s typically for younger animals. As the dog years rise, so do expected medical costs—and thus the annual premium.
We compared costs (as of 2023) for a two-year-old golden retriever in Chicago across two popular plans. The annual expense limit was $5,000 with an annual deductible of $500 and a 70% reimbursement rate. For basic accident and illness plans, costs came close to NAPHIA’s average at $644 a year with coverage for customary diagnostics and treatments. Adding options such as wellness exams or prescriptions pushed the average costs to $851.
When we redid the math for a 10-year-old golden retriever, the annual costs jumped to a range of $1,231 to $1,578. And that was without the extra bells and whistles, which also get more expensive as your pet ages.
Compare that to the average annual vet expense of $230 in Illinois, according to Canine Journal. Emergency visit costs fall in a wide range depending on the severity of the case, according to Betterpet.com. An emergency exam averages from $100 to $200, and an overnight stay can cost up to $2,000. That may or may not include diagnostic tests. A gastroenteritis attack could cost $200 to $3,000, while severe trauma costs range from $2,000 to $10,000.
Here’s an important point to remember about costs and policies overall: They’re heavily based on the size and breed of the pet and their propensity to cognitive and genetic issues. Many pets may “age out” of policies, as some carriers will place an upper age limit on the insurance.
Insurance claims and deductibles
Like the insurance on yourself, your house, or your car, pet insurance has limits, and there are no promises. Suppose Daisy severely injured her leg by falling off the backyard deck onto a glass that gets embedded in the wound. After the emergency visit to the vet and surgery, she comes home limping, with a bandaged leg and paw—maybe even a “boot” to keep fractured leg bones stable.
Your bill is just north of $2,000, and you file a claim for a reimbursement. (There are a growing number of policies that allow vets to bill the insurance company directly, just like many doctor’s offices.) Here comes the claims adjuster, the person who determines if and how much of that bill the insurance will cover. They scrutinize the accident, the injuries, the medical care, and the receipts. The adjuster may ask for a detailed explanation of how the accident occurred, and may contact the vet who took care of Daisy for more information before determining how much should be reimbursed.
Next, they’ll determine if your policy covers such accidents and how much it’s liable for. That’s after you’ve met the annual deductible and what’s left on your pet insurance limits. Most carriers agree to pay 70% to 90% of the costs after deductibles. If you made the claim outside the specified time period laid out in the contract, you’re out of luck. And if you didn’t carefully read what your policy entailed, you might find out the hard way that not all of those tests and procedures were eligible for coverage.
Beware of waiting periods and preexisting conditions
A customary feature in nearly every policy is the waiting period. That means you have to wait a prescribed number of days, weeks, or even months before the policy kicks in, although timelines may vary depending on your pet’s age, breed, and type of coverage.
Like most new health insurance policies, pet policies don’t cover preexisting conditions (i.e., issues that a vet had diagnosed before you obtained the policy).
It’s considered insurance fraud if you apply for coverage knowing full well your pet has been injured, was involved in an accident, has been diagnosed with cancer, etc., and you don’t report it in the policy application.
Make sure you know what the waiting period details are, and remember: If you switch pet insurers, a new waiting period will be put in place. You don’t get a free pass for having insurance elsewhere before. That may be true even if you stick with your current insurer, but change the type of policy.
Should I do it? Weighing the pros and cons of pet insurance
As with so many things in life, it depends. Here’s a quick look at some of the pet insurance pros and cons to consider.
| Pros | Cons |
|---|---|
| Offers peace of mind and allows you to focus on your pet’s well-being and not the financial hit, particularly during an emergency. | Most policies cover only major expenses tied to accidents and illnesses, and do not cover routine or preventative care. |
| Covers expensive procedures. | You may end up paying more through premiums and co-pays over the life of the pet than what an expensive procedure might cost. |
| Some plans allow vets to bill insurance directly. | Many vets want payments up front without the hassle of added paperwork, leaving you to chase down the insurer for reimbursement. |
| Many plans cover 70% to 90% of costs with moderate deductibles. | The higher the percentage and the lower the deductible, the more expensive the plan. |
The bottom line
Pet insurance isn’t for everyone or even every fur baby.
The first step is to be honest with yourself. Is there a dollar figure above which you wouldn’t step in to help your pet get well? Or would you spare no expense—going deeply into debt if you have to—in order to help your furry friend through an injury or illness?
If it’s the latter, pet insurance might be for you. After all, you insure everything else of great value—your home, car, and your own health, for example. And as much as you love Fluffy and Fido, you don’t want them to steer you away from your long-term savings goals.
If you choose not to insure your pet, think about the average cost of a pet injury or illness, and pad your emergency fund accordingly.