How Pet Insurance Works?

The escalating expenses of pet healthcare are causing increasing concerns among pet owners and veterinary facilities.

Pet payment plans are declining in popularity, and while medical credit cards are becoming more accessible, they are only accessible to individuals with favorable credit histories.

A third alternative, pet insurance, offers a solution that accommodates pet parents across income levels, making affordable medical care for their pets attainable. The presence of pet insurance can make the critical distinction between being able to afford life-saving treatment for your pet during an emergency or facing the painful decision of humane euthanasia due to the financial burden of treatment.

Here is a comprehensive overview of how pet insurance operates and its role in assisting you in covering veterinary expenses.

Pet Insurance

What Is Pet Insurance?

Pet insurance functions in a manner akin to human insurance. In exchange for a premium, a pet insurance policy covers a portion of your pet's medical expenses. Pet insurance plans are available for both wellness/preventive care and emergencies or illnesses. One notable distinction is that wellness plans are often offered as separate policies or optional additions to accident-only or accident and illness plans.

The choice of the most suitable plan is contingent upon your specific requirements. Some plans exclusively cover accidents or accidents and illnesses, typically offering more cost-effective options. More comprehensive plans encompass wellness and preventive care. It is also common to have a standalone wellness plan included as part of a comprehensive insurance package. Wellness plans typically include annual check-ups, bloodwork, vaccinations, as well as fecal and heartworm testing.

Another distinguishing feature of pet insurance, when compared to human insurance, is the prevalent use of a third-party billing system. This entails paying your veterinary bill at the time of the appointment and subsequently submitting a claim for reimbursement. Unlike human health insurance, pet insurance companies do not directly cover the treatment expenses. Nevertheless, there are some plans that do offer direct payment to veterinarians.

Additionally, many insurance providers implement a waiting period between policy acquisition and the commencement of coverage. These waiting periods can span from 1 week to 30 days.

Varieties of Pet Insurance and Their Coverage

Pet insurance options exhibit a broad spectrum of coverage, underscoring the importance of exploring multiple possibilities when seeking insurance for your pet. Regardless of the type of policy under consideration, it is essential to meticulously scrutinize all particulars to gain a comprehensive understanding of your purchase. Additionally, comparing each pet insurance policy to alternative plans is advisable. The categories of pet insurance encompass:

Accident and Illness Coverage (A&I)

This represents the most prevalent type of pet insurance plan. These policies extend partial coverage to unforeseen surgical procedures, diagnostic imaging tests like abdominal ultrasounds and x-rays, hospitalization, treatment for ailments such as urinary tract infections, respiratory infections, gastrointestinal disorders, and other infections, cancer treatment, and emergency medical care.

Such coverage proves beneficial in scenarios involving fractured bones, urinary tract infections, bloat, urinary blockages in male cats, acute cancer diagnoses, and treatments, ingestion of foreign objects (e.g., toy squeakers), and a myriad of other health issues.

Accident-Only (AO)

Certain insurance providers offer more economical accident-only plans. These plans offer support for unexpected surgical interventions, such as the removal of gastrointestinal obstructions or treatment of broken bones. However, they do not extend coverage to illnesses such as infections, cancer, diabetes, immune-mediated diseases (e.g., immune-mediated hemolytic anemia, immune-mediated thrombocytopenia, systemic lupus), among others.

Wellness Plans

Wellness plans are designed to encompass preventive healthcare and routine medical services. Typically, they incorporate annual or biannual wellness assessments, adjusted according to age and breed. These evaluations encompass elements like physical examinations, wellness bloodwork and urine analysis, vaccinations, fecal analysis, heartworm and tick-borne illness screening, and deworming treatments.

It is important to note that the majority of pet wellness plans do not include coverage for dental cleanings or dental issues. Some wellness programs may offer annual dental cleanings, but expenses related to dental extractions or root canals are typically excluded.

Many wellness plans do include provisions for spaying and neutering. Nevertheless, there might be limitations regarding the age of your pet and the timing of the surgical procedure. Beyond the advantage of spreading the cost of routine medical care over time, wellness plans facilitate more frequent preventive visits to the veterinarian without concerns about financial constraints.

Dental Insurance

The majority of pet insurance policies do not incorporate coverage for dental checkups, x-rays, dental emergencies, and even routine cleanings. In some instances, specific companies may include coverage for regular cleanings but impose additional charges for accidents or injuries such as fractured or broken teeth or tooth root abscesses. Dental insurance plans offer assistance with unforeseen and costly dental issues, which can cause discomfort to your pet. Additionally, they aid in maintaining your pet's routine dental care.

Additional Coverage Options to Consider

When in the market for pet insurance, it's wise to contemplate various supplementary coverages, including:

  • Behavioral Therapy: Encompassing compulsion or aggression therapy.
  • Training: Covering the cost of professional training.
  • Rehabilitative Treatment: Including rehabilitative procedures.
  • Alternative Therapies: Such as laser therapy, acupuncture, and chiropractic treatments.
  • Prescription Diets: For managing chronic diseases.
  • Supplements: Especially those recommended for the treatment of chronic ailments.
  • End-of-Life Expenses: Comprising humane euthanasia, cremation, and burial.

However, it's crucial to be aware that several cosmetic or elective procedures, like tail- and ear-docking or declawing for cats, are typically excluded from coverage by most pet insurance providers. Similarly, breeding and interventional birthing procedures, including pre-planned or unexpected caesarian sections, are rarely covered.

Addressing Pre-Existing Conditions and Hereditary Issues

It's essential to note that numerous insurance companies do not extend coverage to hereditary issues or pre-existing conditions.

Hereditary Issues

These refer to medical conditions that are predisposed to certain breeds, such as brachycephalic syndrome in Bulldogs, portosystemic shunts in Yorkshire Terriers, or hip dysplasia in Labrador Retrievers. Breed-specific exclusions for purebred dogs are often outlined in insurance policies. However, it's advisable to carefully compare policies and engage in discussions with an insurance representative to gain clarity on these exclusions before making a purchase.

Pre-Existing Conditions

This category encompasses any illnesses or injuries that occurred prior to the effective coverage date of the insurance policy. Most pet insurance plans necessitate the submission of your pet's medical records by your veterinarian during the purchasing process. If these records mention diagnostics or treatments related to a pre-existing condition, it will be categorized as such, and any claims associated with that condition will not be eligible for approval.

For instance, if your pet was diagnosed with a heart murmur at the age of 7 and you subsequently obtain pet insurance, any claims related to congestive heart failure diagnosed six months later would likely be denied coverage. To mitigate this, it's advisable to procure insurance for your pets when they are younger and in good health if possible.

Determining the Cost of Pet Insurance

Similar to human insurance, pet insurance entails the payment of a monthly premium to the insurance company, often accompanied by a deductible—a predetermined amount that must be expended at the veterinarian's office before the policy commences coverage.

  • The cost of pet insurance premiums varies based on several factors:The insurance company
  • The specific policy plan or tier
  • The species of pet
  • The pet's age
  • The pet's breed
  • Geographic location
  • The pet's medical history

Outlined below are the average premiums for dog and cat insurance as of 2020, classified into Accident & Illness (A&I) and Accident Only (AO) categories:


  • A&I (Annual): $594.15
  • A&I (Monthly): $49.51
  • AO (Annual): $218.13
  • AO (Monthly): $18.17


  • A&I (Annual): $341.81
  • A&I (Monthly): $28.48
  • AO (Annual): $133.61
  • AO (Monthly): $11.13

Deductibles in Pet Insurance

Deductibles in pet insurance come in two main varieties: fixed deductibles and selectable deductibles. With a fixed deductible, the amount is predetermined by the insurance company, while selectable deductibles allow you to choose your preferred deductible amount. Once you've paid the deductible cost directly to your veterinarian, your pet insurance coverage comes into play.

When deciding on a plan with a deductible, it's essential to gauge your comfort level with out-of-pocket expenses during a medical emergency. If you're confident in your ability to cover more costs in an unexpected situation, opting for a higher deductible plan is an option. Doing so will reduce your monthly premium, providing a more budget-friendly choice.

Yearly deductibles are the norm in most pet insurance plans, but some plans adopt per-incident deductibles. In the case of yearly deductibles, all injuries and illnesses contribute to a single deductible throughout the year, resetting for the subsequent year. Per-incident deductibles, on the other hand, apply individual deductibles to specific issues requiring ongoing treatment throughout your pet's life, such as diabetes. Opting for insurance plans that permit per-incident deductibles can be beneficial, particularly for chronic conditions, as they fall under one initial deductible instead of multiple ones.

Co-Pays in Pet Insurance

Co-pays, which entail pet parents sharing a percentage of consultation, testing, or therapy expenses, are relatively uncommon in the pet insurance realm compared to human insurance.

Understanding the Claims Process

A claim in pet insurance denotes a request submitted to the insurance company for reimbursement of veterinary expenses. Claims are typically submitted via forms or the insurance company's website or app. In some cases, veterinary offices may assist with the claims submission process. Key documentation for claims includes detailed receipts or invoices indicating payment for treatment.

Upon claim approval, you can anticipate reimbursement through methods like checks, direct deposits, or fund transfers. Occasionally, the insurance company may directly settle the payment with the vet's office. It's important to note that claim approval and payment often involve some delay. Moreover, not all claims receive approval. Therefore, if your vet offers direct reimbursement, it's crucial to ensure mutual agreement on the terms.

Claims may face denials if medical records are incomplete or unclear, pre-existing conditions exist, or if monthly payments are not up-to-date.

Reimbursement rates in pet insurance plans typically fall within a predefined range, often ranging from around 70% to 90% of the initial bill. Some plans allow you to select your preferred reimbursement rate from this range. Additionally, it's important to consider the possibility of reimbursement caps or limits, which determine the maximum coverage amount for specific conditions or treatments. Reimbursement caps may apply to costly diagnostics, therapy, or the management of chronic conditions such as cancer, diabetes, or immune-mediated diseases.

This means that in certain cases, pet parents may be responsible for additional expenses exceeding the monthly premium, should their pet reach the reimbursement cap. Fortunately, many pet insurance companies have adopted a structure where the deductible amount is subtracted from the invoice total, and the remaining balance is reimbursed at a rate of 80% to 90%. To illustrate, if your dog incurs a $4,000 expense for a radius/ulna fracture repair, and your insurance plan features an $800 deductible per medical condition, the company would deduct the deductible amount, leaving you with a $3,200 balance. Assuming a reimbursement rate of 90%, you would receive $2,880 for this specific medical issue, with the reimbursement process taking several weeks to months.

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