• September 16, 2022
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What Is Pet Insurance and How Does It Work? – MarketWatch

What Is Pet Insurance and How Does It Work? – MarketWatch

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In this article: How Pet Insurance Works | Pet Insurance Cost | Is Pet Insurance Worth It? | Bottom Line | Compare Providers | Provider Reviews | FAQs
Pet insurance is a health insurance policy that covers certain veterinary expenses. If your dog or cat experiences an accident, illness or emergency, pet insurance brings peace of mind that it will receive the necessary treatment without a tremendous financial burden. 
Every pet insurance company has unique features, offerings and exclusions. We at the Home Media reviews team encourage pet parents to explore several options to find the best pet insurance provider for their pet’s needs. This guide breaks down all the essential information, plus how to find the right company.
 
 
There are a few aspects to familiarize yourself with when researching pet insurance. First, pet insurance doesn’t work the same as human health insurance. When you receive a vet bill, you pay in full and submit it along with a claim to your pet insurance company. Once approved, the insurance company reimburses a percentage of the cost.  
An injury or illness can occur anytime, and pet insurance provides protection in multiple ways. You get the assurance that your pet will always receive the necessary treatment for health problems, and you’ll never pay hefty vet bills without the help of insurance.  
Some pet parents decline to get a pet insurance policy, assuming that the monthly premium costs over their pet’s lifetime will outweigh the costs of a few medical bills. Read on to learn about pet insurance costs and commonly covered conditions for cats and dogs.
Your monthly pet insurance premiums are based on three major factors: annual limits, deductibles and reimbursement rates. Let’s take a closer look at each one.
Your annual coverage limit is the maximum amount you can be reimbursed for pet care by your provider each year. These limits can range from $2,500 to unlimited. The lower the annual limit, the lower your monthly payments will be. 
If your pet’s breed is predisposed to certain genetic conditions, you may want to consider a higher coverage limit, as its veterinary costs will likely be higher. If your pet is still a puppy or kitten, a lower level of coverage might be more appropriate, as they are less likely to face severe health conditions.
Your deductible is the set amount you need to pay before your pet insurance provider begins reimbursing you for claims. Pet insurance deductibles can range anywhere from $100 to $1,000. Opposite from the coverage limit, the higher the deductible, the lower your monthly costs. 
Deductibles are typically annual, meaning you must meet that amount each year before receiving payouts. However, a handful of providers use a per-condition deductible, meaning you’ll need to pay a new deductible anytime your pet is diagnosed with a new condition. For example, if your dog has been diagnosed with skin allergies and needs lifetime medication, you’ll only pay a deductible for that condition once.
Pet insurance works differently than the health insurance we use for ourselves. Pet owners pay vet bills up-front when their dog or cat receives any care (veterinary, emergency, hospitalization, etc.). Afterward, they submit a claim to their pet provider. If approved, the pet insurance company will reimburse the cost, typically through a check or direct deposit (once the deductible has been met).
Many providers offer a reimbursement percentage ranging from 70% to 90%. The lower your reimbursement rate, the lower your monthly payment, but the more you’ll pay out of pocket for care. For example, if you select a 90% reimbursement rate and your pet’s treatment is $500, your provider will reimburse you $450 minus your deductible. However, if you select a 70% reimbursement rate and your first vet bill is $500, your provider will reimburse you $350 minus your deductible. 
Remember that a low coverage limit, low reimbursement rate and high deductible will substantially lower the cost of your monthly premiums. The downside is there will be more out-of-pocket expenses to shoulder when you submit a claim.
Many providers offer discounts that can help with monthly costs. For example, Lemonade provides a 10% discount for customers who bundle their pet insurance with a homeowners or renters policy. In comparison, Fetch gives a 10% discount to pet parents who have rescued or adopted their pet from a shelter. 
There are two types of pet insurance coverage: accident-only and accident-and-illness. Some providers also offer preventive or wellness care add-ons. Coverage varies across providers, so be sure to narrow down your choices to those that meet your pet’s needs.
Accident-only coverage is the most basic and cost-effective option. These plans only cover accidents, injuries or emergencies and typically include the following:
Accident-and-illness coverage is the most common and comprehensive plan. These policies encompass everything in the accident-only plan plus illnesses and conditions, including the following: 
Accident-only and accident-and-illness plans both cover the following treatments and procedures:
Some providers cover alternative therapies, dental care, behavioral disorders, microchipping, exam fees, prescription food and dietary supplements, but these aren’t offered across the board.
Several providers have optional preventive care add-ons for routine care. They cover specific services up to a certain monetary limit and can be tacked on to your base policy for a monthly fee. Routine care packages typically cover the following treatments:
You may want to add more extras, such as lost pet advertising, end-of-life coverage or reimbursement for canceled vacation plans due to a sick pet. Trupanion and Figo offer optional extra care packages for circumstances like these that stretch beyond the vet’s office. 
To learn more: Pet Insurance Facts and Statistics
All pet insurance providers have exclusions. Below are a few standard exclusions from almost all policies:
Preexisting conditions are those for which your pet either showed symptoms, was diagnosed or received treatment before your pet insurance policy started. They include any illnesses or injuries that may occur during your policy’s waiting period, or the time frame between your enrollment in a plan and when you can begin filing claims.
No pet insurance providers cover preexisting conditions. However, some companies distinguish between curable and incurable conditions, opting to cover curable conditions with specific requirements. Embrace, Spot and ASPCA all make these distinctions.
 
 
In addition to your reimbursement rate, coverage limit and deductible, several other factors affect your pet insurance costs:
To learn more: How Much Does Pet Insurance Cost?
 
 
Pet insurance can be worth it for many pet owners. It ensures that your pet will be taken care of and your finances won’t be in turmoil if an unforeseen emergency or illness occurs.
“When it comes to a life-or-death situation, the last thing we want to do is weigh the financial pros and cons, questioning if we’ve saved enough money to keep our beloved pet alive,” says Megan Mars, a dog trainer and the owner of K9ofmine.com. “Pet insurance ensures you never have to make that tough call.” 
You should also consider the potential out-of-pocket vet expenses you’ll incur without pet insurance. According to data from Healthy Paws, veterinary care for the most common pet conditions is significantly more expensive than the average annual pet insurance policy. 
Urinary tract infections, which can lead to kidney problems, can cost up to $9,115 to treat a dog or $12,587 for a cat. By contrast, the average annual cost for pet insurance runs between $360 and $600 for dogs and $180 to $360 for cats.
Our pet experts say the best time to purchase a pet insurance policy is as soon as possible — even before you bring your new pet home. “If an owner waits until after the first puppy or kitten checkup, the vet may detect a medical condition that would never be covered by the insurer as it would be classified as ‘preexisting,’” says Dr. Linda Simon, a veterinary surgeon and consultant for FiveBarks. This is especially true for pet breeds that are susceptible to genetic diseases.
“When any of my clients contact me about a new pet coming into the family, the first thing I tell them to do is to get pet insurance,” veterinarian Dr. Shannon Barrett adds. “It is the most important investment an owner can make.” 
Pet insurance policies tend to be cheaper when pets are younger, so prices will likely increase with age. However, Trupanion guarantees its customers that it will not raise rates as their pet ages.
 
 
An unexpected accident or illness can occur at any time. Pet insurance gives you peace of mind that you won’t have to think twice about getting your pet the health care it needs. Providers will reimburse pet owners anywhere from 70% to 100% of the total cost of their veterinary bills. Should a serious health issue befall your pet, a pet insurance policy is worth it. 
Since pet insurance premiums depend on multiple factors, we recommend getting at least three quotes to compare policies. If you’re ready to research providers, check out our guide to the best pet insurance companies for cats and dogs.
 
 
Compare our top pet insurance providers based on price, waiting periods, discounts and more.
Provider
Get a Quote
Our Score
Monthly Cost*
Waiting Periods
Multi-pet Discount
Mobile App
Lemonade
Visit Lemonade
4.55 out of 5
$20.20
2 days for accidents; 14 days for illnesses
5%

Spot
Visit Spot
4.45 out of 5
$45.98
14 days for all conditions
10%

Trupanion
Visit Trupanion
3.92 out of 5
$87.67
5 days for accidents; 30 days illnesses
None

Fetch
Visit Fetch
4.47 out of 5
$42.99
15 days for all conditions
None

Embrace
Visit Embrace
4.52 out of 5
$52.12
2 days for accidents; 14 days for illnesses
10%

Healthy Paws
Visit Healthy Paws
4.2 out of 5
$43.94
15 days for all conditions
None

Figo
Visit Figo
4.5 out of 5
$25.67
Varies by state
5%

Prudent Pet
Visit Prudent Pet
4.52 out of 5
$48.53
5 days for accidents; 14 days illnesses
10%

*Each provider’s monthly cost is based on accident-and-illness policy quotes we obtained for a 4-year-old, medium-size, mixed-breed dog in Raleigh, N.C.
 
 
Read reviews for each of the following providers to learn more about each company and what it offers:
 
 
Pet insurance premiums cost $10 to $100 per month. Most pet parents should expect to pay between $30 and $50 for dog insurance and $15 to $30 for cat insurance. 
Yes. Pet insurance companies reimburse you, the pet owner, not the veterinarian. Providers allow you to bring your pet to any licensed vet in the United States.
Pet dental coverage varies across providers, with some covering only dental accidents and others covering both dental accidents and illnesses. For instance, Embrace Pet Insurance covers dental accidents and illnesses within its standard plan, reimbursing for damaged teeth, gum disease, root canals and tooth extraction. Lemonade’s policy covers pet dental accidents only. 
You can cancel your pet insurance policy anytime by contacting your pet insurance provider. Most companies offer a 30-day money-back guarantee that provides a refund if you cancel during this time frame (provided that you haven’t yet submitted a claim).
 
 
Our review of pet insurance companies is based on in-depth industry research that includes reading hundreds of customer reviews, simulating the quote and purchasing process, speaking to representatives on the phone to assess the customer service experience and surveying 1,000 dog and cat owners nationwide to determine the most important elements of pet insurance coverage.
We scored each provider on a 100-point scale based on those elements. We then divided the points earned for each provider’s final score on a 5-point scale.
Here are more details about each factor and how they’re weighted:
We use our rating system to compare and contrast each company against key factors to help us determine the best pet insurance companies in the industry. Additionally, we keep our research up to date and revisit our reviews on a regular basis.
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