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When you get sick, a trip to the doctor is often covered by a manageable copay. Taking your pet to the vet, on the other hand, can run you more than your rent payment. That’s where pet insurance comes into play.
Pet insurance can minimize the financial burdens of caring for animals and provide peace of mind if you have to rush your pet to the ER. Pet owners with pet insurance are more likely to take their pets to the vet.
Learn the pros and cons of pet insurance and how it differs from human health insurance to better understand whether it’s a good fit for your pet and your budget.
What pet insurance does
Pet insurance is a specialized type of insurance policy that covers veterinary costs for unexpected injuries, illness or wellness visits. This could be anything from bee stings and broken bones to chronic conditions like diabetes and even cancer.
Pet owners shelled out $38.3 billion in vet care and products in 2023. Pet insurance helped defray some of these costs. A 2023 North American Pet Health Insurance Association (NAPHIA) state of the industry report showed that more than 5.5 million pets are insured in the U.S. with $3.9 billion in total premium volume.
Here’s a quick breakdown of how pet insurance works:
- When you enroll your pet in a pet insurance plan, you typically pay a monthly premium. This can range from $17 a month to as much as $56 a month depending on your pet’s age, breed, location (where you live) and choice of coverage.
- In return, the insurance company agrees to reimburse you for a portion of eligible veterinary expenses, such as surgeries, medications and hospitalizations. Some insurance companies will even pay the vet’s office directly.
- Similar to human health insurance, there are often deductibles (a fixed amount you have to reach out of pocket before the insurance kicks in), co-pays (your share of the service fee after the deductible is met) and caps on how much can be reimbursed in a year.
There are three main coverage options for pet insurance. These policies can vary greatly in terms of price and what they offer.
- Accident-only plans: Covers injuries from accidents, such as broken bones or ingesting foreign objects.
- Comprehensive plans: These plans combine accident and illness coverage, often including treatment for common illnesses, cancer or chronic conditions and prescriptions.
- Wellness plans: Covers routine and preventive care, such as vaccinations, flea/tick treatments and annual exams.
Some pet wellness plans are prepaid veterinary care plans. Many veterinarians and animal hospitals offer prepaid plans that focus on preventive care services, such as vaccinations and routine checkups, and provide discounts on other services. Seldom do these plans cover unforeseen illnesses or injuries.
Pet insurance vs. human health insurance
Like humans, animals require a range of medical care, from simple wellness visits and routine dental cleanings to chronic illness or cancer treatments. And as with humans, medical care can result in a significant financial burden.
Human health insurance has a longer history and a more integrated and streamlined system with health care providers. It is ultimately designed to make medical treatment affordable.
Pet insurance is a relatively newer industry. While it does help pet owners with unforeseen medical issues, these two insurances operate very differently. Take pre-existing conditions, for example.
With humans, insurance companies cannot deny coverage or charge higher premiums for pre-existing conditions. Conversely, covering your pet’s pre-existing conditions can be a gray area, with many policies excluding certain conditions or charging higher premiums.
The following table breaks down several other key differences.
| Feature | Human health insurance | Pet insurance |
|---|---|---|
| Reimbursement model | Usually pays providers directly, with patients responsible for copays or coinsurance | Usually operates on a reimbursement basis, where you pay the vet bill at the time of service and then submit a claim for reimbursement. |
| Cost structure | Premiums average around $300+ per month and can be subsidized by an employer or the government. | Premiums average around $49 a month for dogs and $28 a month for cats. They also vary based on age, breed and location. |
| Coverage limits | Cannot impose lifetime limits on coverage. | Many policies have annual or lifetime coverage limits. |
| Claim process | Claims are usually handled directly between the provider and the insurer. | Claims are usually submitted online after the veterinary visit. |
| Preventative care coverage | Typically includes coverage and even “no charge” for preventive services. | Most standard plans do not cover routine or preventive care, though some offer wellness add-ons for an extra cost. |
| Networks | Often has restricted provider networks | Usually, you can visit any licensed veterinarian without worrying about in-network or out-of-network providers. |
Keep in mind: Pet insurance is very different from human health insurance, but knowing the differences can help pet owners better navigate the specifics of pet insurance and how it might best serve their needs.
Pros and cons of pet insurance
The most compelling advantage of pet insurance is the financial protection it offers. As with all financial products, there are pros and cons to weigh out before purchasing a pet insurance policy.
Pros of pet insurance
- Customizable coverage options: With three main types of coverage plans and add-ons available, pet owners can tailor a policy that fits their pet’s needs within a fixed budget.
- Employee benefit: Many employers are incorporating pet insurance into employee benefit packages, making pet insurance even more affordable and accessible.
- Financial relief for unexpected vet bills: Pet insurance can significantly alleviate the financial impact of unforeseen vet care, covering a large percentage of costs incurred from wellness services to surgeries or emergency treatments.
- Flexibility in choosing your veterinarians: While human health insurance mandates which doctors you can see, pet insurance allows pet owners to seek treatment from any licensed veterinarian or specialist.
- Peace of mind: Knowing there is financial protection and assistance, pet owners aren’t forced to make difficult decisions or skip expensive treatments based on cost alone.
Cons of pet insurance
- Copayments and deductibles: Like human health insurance, pet insurance utilizes copays, deductibles and coinsurance, which are also upfront out-of-pocket expenses.
- Coverage exclusions and limitations: Pet insurance policies often come with exclusions and limitations, particularly regarding pre-existing conditions, routine wellness care and specific treatments unless add-on coverage is acquired.
- Out-of-pocket payments: Because pet insurance has a reimbursement model, pet owners have to pay the veterinarian or ER for services rendered and then navigate the process of getting their money back.
- Premium costs: Young, healthy pets require lower premiums. But as pets age, the price can go up. Over time, this could outweigh the financial benefits if the pet remains healthy.
- Underutilized benefits: Some pet owners may see a lower return on investment if their pet remains healthy and doesn’t require a majority of the veterinarian care provided by the pet insurance.
Do you need pet insurance?
Whether you need pet insurance ultimately depends on factors such as your financial situation and your pet’s age, breed and known health predispositions. Younger, healthier pets will cost less to insure, but accidents can happen at any age. Then there’s the cost of veterinary care in your area.
If you’re not in a position to handle a sudden, high vet bill, insurance could be a prudent choice. However, pet owners need to be prepared to pay upfront and out-of-pocket costs. This is when setting up a savings account or applying for medical credit cards can help.
Depending on the type of savings account, the interest you earn can also help with premium payments. It’s also important to carefully review the fine print to understand the cost, coverage and limitations.
The bottom line
Pet insurance can be a game-changer, giving pet owners access to comprehensive and advanced treatments they might not otherwise afford.
Even as the American Veterinary Medical Association (AVMA) encourages veterinarians to educate clients about pet insurance, pet owners should still research their options and decide if pet insurance is a worthwhile investment.
Frequently asked questions
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Unlike human health insurance, there are no government subsidies or assistance programs for pet insurance, which may offer subsidies and financial assistance through programs like the Affordable Care Act (ACA) or Medicaid.
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Yes, many pet insurance plans cover visits to veterinary specialists, such as dermatologists or oncologists, and some policies also include alternative treatments like acupuncture or chiropractic care. Check your specific policy for details on coverage and any limitations.
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Pet insurance policies typically have waiting periods before certain coverages begin, ranging from a few days for accidents to several weeks for illnesses. In contrast, human health insurance often has no waiting periods for coverage to start once the policy is active.
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