Is Pet Insurance Worth It?

If your pet is injured or sick, pet insurance can help cover medical expenses. Insurance products that were once little-known have become active. Nearly 4 million cats and dogs are insured in the United States, according to the North American Pet Health Insurance Association’s “State of the Industry 2022” report. This is more than double the total number of cats and dogs insured in the United States in 2017.

Pet insurance may be cheaper than you think. Forbes consultants analyzed pet insurance rates and found that in 2022, puppies cost an average of $35 a month and cats cost $28 a month. If you’re wondering if pet insurance is worth it, there are a few things to consider.

What is Pet Insurance?

Pet insurance is designed to offset the cost of veterinary care. In exchange for paying a monthly premium, you may be reimbursed for a portion of the cost of your plan’s procedure. Some policies only cover accidents, while others include illness. Medical care plans are also available for day-to-day management.

How does pet insurance work?

Generally, pet insurance works as a reimbursement. Pay the full cost of treatment up front and contact your insurance company to get reimbursed. Some insurers calculate compensation based on a certain percentage (usually 70-90% of the cost of the procedure). Other insurers use a benefit system that reimburses a certain dollar amount per procedure.

Like other types of insurance, pet insurance usually includes deductibles, which are the amount the insurer must spend on the care before it will reimburse coverage. It can range from $50 to $1,000, depending on the insurer and type of policy.

In most cases, the deductible is an annual amount, which means it must be paid annually before coverage begins. Trupanion, one of the best pet insurance companies, handles deductibles somewhat differently. It imposes a lifetime limit, not an annual limit, but a condition-based limit. This means that once you reach the limit for a certain type of treatment, you won’t pay again as long as you keep the policy.

Pet insurance does not require that pets be taken to participating veterinarians or “in-network” veterinarians for coverage. You can take your pet to a licensed veterinarian, and you don’t need prior authorization to get treatment.

Pet Injury Insurance.

More and more owners are choosing to buy pet insurance. According to the North American Pet Health Insurance Association, nearly 4 million dogs and cats in the United States had pet insurance in 2021. That’s a 28 percent increase over the previous year. The total number of insured cats and dogs in the United States has more than doubled since 2017.

This is significant growth, but the industry still covers only a small portion of American pets. According to the American Pet Products Association, there are 69 million households in the United States that breed dogs and 45 million households that breed cats.

What does pet insurance cover?

Like human health insurance, pet health insurance offers several different types of coverage, each with a list of coverage options and costs. The names used vary by insurer, but the three most common types of insurance are:

Be Healthy.

As the name implies, this type of coverage usually includes vaccinations, regular checkups and dental care. This is sometimes called “routine” or “preventive” care. Health insurance is usually non-deductible, but it does not cover illness or accidents.

Accident.

This insurance covers accidental injuries such as poisoning or swallowing foreign objects, car or van wounds, and other physical injuries. Accident-only insurance is often preferred by owners of older pets who do not have full coverage.

Accident and Illness.

This type of coverage is the most comprehensive and pays for veterinary treatment for injuries, illnesses, ailments and, in general, all changes in a pet’s normal condition. Depending on the services provided by the insurer, some pet owners choose to include health insurance in their comprehensive accident and illness policies.

Level of Coverage.

Within each type of insurance, most insurers offer different levels, which are denoted by names such as Basic, Extended and Premium. As you can imagine, Basic offers the cheapest and lowest level of coverage.

So, is pet insurance worth it?

Insurance companies aren’t in the business of paying more than they get in premiums. But that doesn’t mean it’s always against you. If you suffer an unexpected big vet bill, the amount you pay in premiums may be far less than the amount you get. And that’s the point of insurance. To get financial protection against large-scale disasters.

One scenario is:

• Premiums: Let’s say you paid about $684 a year for your beloved dog for three years. At this point, pet insurance premiums are $2,052.
• Big vet bill. Then the puppy eats one of the kids’ toys, which ends up costing the vet $4,000. If you have a $500 deductible and a 90% reimbursement, your own accident costs would be $850 ($500 deductible + 10% of $3,500 = $850).
• The results are this: combined with three years of insurance and a toy case, you paid $2,902. Without pet insurance, you would have paid $4,000 to the vet. You avoided paying about $1,100 by signing up for pet insurance.

What is pet insurance cost?

According to NAPIA [1], the average annual cost of an accident and illness insurance policy is about $584 for dogs and about $343 for cats. It costs about $49 a month for dogs and $29 a month for cats.

If you choose an accident-only policy, the annual cost drops to $239 for dogs and $130 for cats. For example, if your pet is hit by a car or swallows a poisonous thing, you may get treatment, but if he’s sick, you won’t pay for treatment.

Insurance premiums can vary greatly depending on the age and breed of your pet, the cost of veterinary care where you live, and the insurance you choose.

Keep in mind that the older your pet gets and the more susceptible he or she is to health problems, the more likely this rate will increase. Unfortunately, if the plan becomes too expensive for your budget, you may end up canceling that guarantee when your pet starts needing it the most.

To find out how much rates will increase over time, we checked out a rough estimate from Pet Best, a Labrador Retriever insurer living in Brooklyn, NY. Below is the monthly price of policies with an annual limit of $5,000, a $500 deductible and an 80% repayment rate.