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essential tips

The ultimate guide to pet insurance

Everything pet owners need to know about the policies that protect their four-legged friends — and their wallets.

Updated August 31, 2021

Created By

Emily Johnson,

The essentials

  • Pet insurance is a policy purchased by an owner to help offset the cost of their pet’s vet bills — It can cover both wellness and emergency visits.
  • It works more like property insurance than health insurance  — The policyholder must pay the bills upfront and will be reimbursed by the insurance provider.
  • There are waiting periods — Also known as a qualifying period, this is the time before insurance coverage kicks in.
  • Insurance companies never cover a pet’s pre-existing conditions — These conditions include illnesses or injuries that were diagnosed prior to applying for pet insurance.
  • Costs and coverage can change based on a variety of factors — You may have an out-of-pocket deductible payment before a plan pays a percentage of covered procedures.

The rise of pet insurance

Pet parents are becoming more aware of the rising costs of veterinary care — to offset those costs, many pet parents are investing in pet insurance.

According to the American Pet Products Association (APPA) National Pet Owners Survey, 67% of U.S. households (nearly 85 million homes) own a pet. These households spent over $97 billion in 2019 and $103.6 billion in 2020. That number is projected to increase to $109.6 billion by the end of 2021. Along with the projected spending increase, there was also a rise in the number of pets who were covered by a pet insurance policy in 2020 (23.4% increase over the last five years, to be exact).

Today, the pet insurance marketplace in North America is comprised of 20 companies:

Pet insurance companies in North America

  1. American Modern Insurance Group
  2. AXIS Capital
  3. The Connected Pet Company
  4. Crum & Forster Pet Insurance Group
  5. Embrace Pet Insurance
  6. Figo Pet Insurance
  7. Healthy Paws Pet Insurance & Foundation
  8. Independence American Insurance Company
  9. Liberty Mutual
  10. ManyPets Pet Insurance
  11. MetLife Pet Insurance
  12. Nationwide
  13. Pethealth Inc.
  14. Petpartners
  15. Petplan
  16. Pets Best Insurance Services, LLC (Pets Best)
  17. Physicians Mutual
  18. Prudent Pet Insurance Agency
  19. Pumpkin Pet Insurance
  20. Spot Pet Insurance

These 20 pet insurance companies make up the North American Pet Health Insurance Association (NAPHIA). This is a self-governing, regulating, and supporting organization that’s committed to advancing and growing the pet health industry. NAPHIA represents approximately 99% of the pet insurance policies in effect in the U.S. and Canada today.

How pet insurance works

If you have a pet, you’ve likely become well acquainted with the veterinarian. You’ve probably also realized how expensive pet care can be, especially when injury, illness, or emergency strikes. Pet health insurance helps curb some of the cost, even for normal wellness procedures.

Pet insurance plans work similarly to human health insurance policies — they both have annual premiums, deductibles, co-pays, and maximum payouts. The main difference, however, is that human health insurance pays for the bulk of the cost first and sends the rest of the bill later.

Pet health insurance requires the owner to pay the bill, then wait for a refund from the insurance company. Most pet policies will also give you the choice to use any vet you’d like. There aren’t any “out-of-network” doctors, like human health insurance. It’s important to know what your plan covers when looking for the best policy for your pet.

There are three general levels of coverage:

  1. Accident coverage. This is the least expensive option and provides the lowest reimbursements for procedures. It’ll help pay for accidental injuries and poisonings. These policies usually have an annual deductible, a max payout on reimbursements per accident or illness, and sometimes max payouts on total reimbursements per policy term, too.
  2. Accident and illness coverage. It costs more than accident coverage but comes with more generous benefits. These include reimbursements for accidental injuries, emergencies and illnesses, and coverage for maintenance care — office visits, prescriptions, diagnostics, and X-rays. They tend to have lower annual deductibles than accident-only coverage, but also have max payouts for each accident and illness. There’s usually a cap on total reimbursements for the policy term, as well.
  3. Wellness coverage. This coverage reimburses pet owners for preventive/maintenance care, including regular exams, allergies, worm and parasite prevention, and vaccinations. There typically isn’t a deductible for wellness care, but there is a small deductible for other services and procedures.

How much pet insurance costs

Similar to human health insurance plans, a pet owner has to pay a monthly or yearly premium. The premium price can vary depending on a few variables:

  • Species. Insurance policies are available for all types of pets, including dogs, cats, rabbits, ferrets, birds, reptiles, pigs, horses, and rodents.
  • Breed. Some breeds are predisposed to certain illnesses and injuries.
  • Gender. More claims are submitted for males than females, so females tend to cost less.
  • Age. The older the pet, the more likely they’ll need vet care, thus the costlier the insurance.
  • Location. Insurance costs more in major metro areas than in the suburbs and rural areas.

👉 Nationwide is the best pet insurance provider for exotic pets like birds or reptiles.

The monthly cost of pet insurance varies based on all of these factors. According to NAPHIA, dog and cat owners can expect to pay anywhere between $10 to $50 for monthly premiums. Most pet owners will spend around $30 to $50 per month for a plan with accident and illness coverage. Accident-only coverage tends to be the least expensive, leaning toward the lower end of $10-$20 a month.

Cheaper isn’t always better, it’s important to take into consideration the type of financial coverage you’d like and the health of your pet. If you decide that you’re comfortable paying out of pocket for annual wellness costs, then accident-only may be a good choice for you and your pet.

Pet insurance waiting periods

A waiting period, also known as an elimination period or qualifying period, is the amount of time a policyholder must wait before their coverage comes into effect. They won’t be able to receive benefits for any claims filed during that time period.

Waiting periods vary based on the state you’re in and the coverage you’re buying.

  • Basic (accident-only): 3 – 15 days
  • Comprehensive (illness and accident): 14 – 30 days (for certain serious conditions, such as hip dysplasia, the waiting period can range from 6 – 12 months)

If your pet has a serious pre-existing condition, such as hip dysplasia or a ligament injury, it may take down the start time — Pet insurance policies won’t cover anything related to the pre-existing condition.

👉 While pet insurance won’t cover pre-existing conditions, telehealth services like Pawp will.

Maximum payouts

A max payout is the maximum amount of money you can receive from your insurance policy. These might be per claim, per year, or over the life of the policy. Generally, the highest level plans have the highest maximum payouts.

Important note on life insurance policies

Your current homeowners insurance policy may also offer some protection that covers pets.

Liability. If your dog bites someone and you get sued, your homeowners or renters insurance policies may provide liability protection to defend you in court. Be aware that most policies will exclude any dog with aggression issues or a bite history. Many homeowner associations or rental owners will also restrict breeds that are typically thought to be dangerous or they’ll require owners of these dog breeds to carry additional liability coverage.

Personal property. If your dog or any of your dog’s personal items are stolen, they can be covered under the personal property section of standard homeowners and renters policies.

Is pet insurance really worth it?

The cost of a dog or a cat can be overwhelming, especially in the early phases of life with back-to-back vet visits for vaccinations and wellness checks. We spoke with a Financial Advisor, Christopher Graper, on two ways pet parents can plan for these costs.

There isn’t one correct way to financially prepare for a pet — there are lots of unique ways! However, budgeting for an emergency fund or purchasing pet insurance are two great ways to help offset risk.

Christopher Graper CFP® | MBA | CIMA® | CRPC® | CLTC®

One option Graper recommends is for pet parents to purchase a pet insurance plan to help curb the routine medical expenses (exam fees, flea, tick, and heartworm preventatives) as well as accidents (poisoning, broken bone, injuries). If pet parents don’t want to commit to pet insurance, he said that owners can put the amount of a monthly pet insurance premium into a kitty or doggy emergency fund to pay for unexpected veterinary bills.

If you don’t feel confident that you’ll stay committed to a monthly savings account for your pet, we recommend purchasing a pet insurance plan to give you peace of mind. At the end of the day, if your furry friend is sick or an accident happens, you won’t have to worry about affording the care that they need. Here are 8 reasons why pet insurance is a great investment for pet owners.

To find the best pet insurance policy for you and your pet, get a variety of quotes from multiple providers to see who offers the most comprehensive care and affordable plan for your budget.