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How Does Pet Insurance Work?

What You Need to Know About Pet Health or Veterinary Insurance

By Maureen Ryan. November 06, 2012 | See Comments

How Does Pet Insurance Work?

Pet insurance is different from health insurance for people in some important ways. Learn what the differences are, and how pet insurance works.

Insurance – all types of insurance – can get complicated. Pet insurance is no different. Over the past several years, pet insurance companies have been instituting changes to try and simplify policies while offering more flexible and complete coverage. At the heart of the industry, though, there are three key characteristics of pet insurance that define how these plans work.

1. It’s a reimbursement plan

The first point that confuses many pet owners at first is the fact that pet insurance isn’t medical insurance like humans have. “Pet insurance is property insurance,” explains Mike Hemstreet, the founder of PetInsuranceReview.com where pet owners can compare insurance providers and policies. “You pay your vet and then submit your bills to get reimbursed,” says Hemstreet.

How much your insurance company reimburses you varies. Some policies pay on a schedule, reimbursing you a fixed amount for a specific type of treatment (for instance, you might be reimbursed $200 for a dental cleaning and have to pay the rest of the cost out of pocket). Other plans pay a percentage of your total bill. With the schedule payments, you have the advantage of always knowing exactly how much you will get from your insurer. However, according to Hemstreet, if you live in an area where the costs of pet care are higher than average, you would be better off with a percentage policy.

2. It’s a choice of two basic coverage options

Insurers typically offer annual policies that can be renewed and altered year to year as needed. When choosing a policy, you start by deciding whether you want an accidents-only policy, in which there is no coverage for illnesses or preventive care, or what’s called a traditional plan, which is a policy that covers illnesses, accidents, and preventive care services such as flea and tick treatments.

According to Hemstreet, most veterinarian costs come from illness, so it’s best to include that coverage. Douglas G. Aspros, DVM, president of the American Veterinary Medical Association (AVMA), says that coverage for illnesses and injuries is especially good for the clients he sees at his practice at the Bond Animal Hospital in White Plains, New York, who consider their pets part of the family.  “When they find themselves in a position where their pet has cancer or needs surgery, the clients that are most happy,” says Dr. Aspros, are the ones who have comprehensive insurance that includes coverage for illness. “They find that it relieves them from having to make a purely financial decision. They’re in a position to make the best medical decision for their pet.”

Beyond the two general options, providers are increasingly allowing pet owners to customize specific elements of their policy such as deductibles, coinsurance percentages, and annual maximums.

3. It’s usually not available for sick or old pets

Hemstreet says that the question he gets asked the most is how pet owners can get coverage for a pet that was just diagnosed with a chronic disease. “Unfortunately,” he says, “no insurance company will cover pre-existing conditions.” That’s why, he says, you have to start shopping around for insurance early. “The idea is to get insurance before your pet gets sick,” asserts Hemstreet, “because once they have a chronic condition, they won’t be covered by anyone.”

Similarly, providers are not likely to offer a policy to an older pet if you’re looking for insurance with them for the first time. You usually can continue to get coverage on a pet you already have insured with that provider, but your premiums are likely to go up year to year. You may also be told that your insurer will not reimburse you for continued treatments for a condition you've already made a claim on. 

For decades, insurers regularly also refused to cover diseases for certain breeds of cats or dogs. For instance, Dr. Aspros says Bulldogs or other brachycephalic breeds of dogs and cats may have been denied coverage for respiratory illnesses since they are so common in these pets. Increasingly, insurers are willing to cover these types of hereditary conditions, but it’s not offered by every insurance company. 

Are There Alternatives?

Yes, find out more about how a prescription plan for pets like PetPlus is different from pet insurance.

More on Pet Wellness:

How a Healthy Weight Can Prevent Disease in Your Dog
Benefits of Vitamins and Supplements

This information is for informational purposes only and is not meant as a substitute for the professional advice of, or diagnosis or treatment by, your veterinarian. Always seek the advice of your veterinarian or other qualified professional with any questions you may have regarding a medical condition. Never disregard or delay seeking professional advice due to what you may have read on our website.

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