Pet Insurance 101

Posted by Billy Francis

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Health insurance is a basic need for millions of people, but what about insurance for furry family members? As every pet owner knows, our dogs can get injured or sick, or develop other health conditions with little to no warning. Veterinary care can be life-saving, but it doesn’t have to drain your life savings. Pet insurance is a way of spreading costs and protecting both your pet and your bank account. Finding the plan that best fits Fido can be overwhelming, but we’ve got the 101 on how it works, what you need to know, and where to sign up.

Does My Dog Really Need Pet Insurance?

"I'm here to learn." Photo by Facebook.com/PetsBestInsurance

Fido gives you love, companionship and loyalty, but he can’t foot his own medical bill. Pet insurance is a health insurance policy that pet owners can purchase to help lessen the overall costs of vet bills and care. The coverage protects owners from having to make a decision between doing what’s best for their best friend or going into the red.

The American Pet Products Association’s 2021-2022 National Pet Owners Survey reports that 70% of U.S. households now have a pet. As pet ownership has increased, so has the pet insurance industry. According to The North American Pet Health Insurance Association (NAPHIA), more than 3.45 million pets were insured across North America by the end of 2020.

A study by The People’s Dispensary for Sick Animals (PDSA) found that dog owners should expect to spend at least $6,000 over a pet’s lifetime and could end up paying over $30,000, depending on the dog’s breed. This estimate doesn’t even include emergency veterinary care. Based on claims Pets Best received over the course of a year, unexpected vet care costs increased from $761 for the first three years of a dog's life to $1,545 between the ages of 10 and 12. From the moment you bring a puppy home, the veterinary costs start to stack up: vaccinations, heartworm prevention, spay or neuter surgery, microchipping and other startup costs mean a new puppy could cost more than $1,000 before she’s even chewed through your socks. Pet insurance companies can’t help with the costs of a new wardrobe, but they can save you money on routine and unexpected veterinary care throughout your pup’s life, alleviating stress so you can concentrate on the most important thing: Fido’s health and well-being.

How Pet Insurance Works

"We've got this!" Photo by mbfrye from Pixabay

Pet owners should always expect the unexpected, but insurance shouldn’t be full of surprises.

  1. Pet insurance is similar to home and health insurance. Each month, members pay a premium, which varies depending on the coverage. For example, Pawp offers cheaper monthly premiums that only protect against emergency veterinary costs, whereas companies like Pumpkin have higher premiums and cover everything from diagnostic tests to dental disease.
  2. Almost all pet insurance plans require members to pay for veterinary visits out of pocket and then file a claim for reimbursement. Depending on where you take Fido, your veterinarian's office may take care of claims, so you don’t have to do anything except wait for the reimbursement (on average between 5-9 days). On the other hand, Trupanion works with select vets throughout the U.S. to offer direct payments, which means you get a decision on your claim in seconds and you don’t have to wait to be reimbursed. Click here to see which vet accepts Trupanion’s payment solution in your state. Pets Best offers a similar direct payment to vets service. Simply send a signed copy of their veterinarian reimbursement release form along with your completed claim. Once your claim has been processed, they send any eligible reimbursement amount straight to the vet's office.
  3. Reimbursement usually covers between 70-90% of medical costs, although companies like Figo and ManyPets offer plans that provide 100% reimbursement for vet visits. The rest of the payment is known as the copay and is covered by the pet owner.
  4. Before pet insurance kicks in, members must meet the agreed-upon deductible, which often ranges from $100 to $1,000. Usually, the higher the deductible, the lower the monthly payment. Pets Best is one of the companies that offers customizable plans that allow members to select their own deductible. If you want to avoid deductibles and copays completely, Pawp coverage costs a flat fee of $24 and gives you access to the Pawp Emergency Fund, which covers one emergency veterinary visit up to $3,000 per year.

Before you sign on the dotted line, read up on our top 10 tips for buying pet insurance.

Which Pet Insurance Provider Should I Choose?

"Does this checkup come with treats?" Photo by Facebook.com/PetsBestInsurance

Choosing the best pet insurance plans for your furry family members can be a challenge. But new pet insurance companies have entered the market in recent years, giving pet parents more options for insuring their dogs and cats than ever before. According to NAPHIA, there are 20 main pet insurance companies who account for 99% of policies in North America. Below is a list of some of the most popular and trusted pet insurance providers, and what sets them apart from the rest of the pack. You can check out the full list here.

Petco

Petco offers flexible and affordable plans to suit your dog's needs and your own. In addition to nationwide coverage (and it doesn't have to be a Petco veterinarian), people who sign up their pup gain access to certified vet professionals and pet health consultants for no extra charge with the pet concierge service. Petco's more extensive plans cover dental disease like gingivitis and periodontitis, behavioral issues and hereditary illnesses.

Petco plans average $40 per month.

Trupanion

Trupanion coverage begins at birth and welcomes new members up to 14 years old. Plans have no payout limits and cover up to 90% of the cost to treat all new injuries and illnesses, including diagnostic tests, surgery, medication, hospitalization, supplements, prosthetic devices and more. All you have to do to make a claim is submit an invoice online (often this will be done for you at the veterinarian’s office).

Trupanion plans average $45 per month.

Nationwide Pet Insurance

Nationwide Pet Insurance is the largest pet insurance company in North America. In 1982, they became the first pet insurance company in North America when they insured Lassie. Coverage can start at birth and be purchased until dogs are 10 years old. You can also sign Fido’s scaly and feathered friends up for the only insurance available for birds and exotic pets in North America.

Nationwide Pet Insurance plans average between $25-60 per month.

Healthy Paws

Healthy Paws is responsible for revolutionizing the pet insurance industry with the introduction of the first pet insurance app, making uploading a claim even easier. Policies have no limit on payouts per incident, annual term, or lifetime of your pet, and cover a range of injuries from advanced cancer treatments to ACL surgery.

Healthy Paws plans average $40 per month.

Figo

One of the only companies to offer 100% reimbursement for new injuries and illnesses costs, Figo also has one of the industry’s shortest waiting periods between signing up and coverage beginning for accidents, starting at just one day.

Figo plans average around $1.50 per day.

Pets Best

Pets Best allows members to adapt a plan to suit Fido’s needs, including deciding annual limits, annual deductibles, and reimbursement. Wellness plans can also be added to cover regular vet visits, vaccinations and spay or neutering. Pets Best never increases premiums based on the number of veterinary visits.

Pets Best plans average between $35 and $48 per month.

Pawp

Established in 2019, Pawp offers a cheap alternative to regular pet insurance, with no deductibles or copays. Members pay one flat monthly fee for cats and dogs of any age, breed, geographic location, or medical history. Pawp is a “digital health clinic for your pet” that offers 24/7 access to vets and pet experts through a user-friendly app. Membership also gives you access to the Pawp Emergency Fund, which covers one emergency veterinary visit up to $3,000 per year.

Pawp plans cost $24 per month.

Pumpkin

Pumpkin users receive 90% cash back on accident and illness claims that won’t decline with age, diagnostics, treatment and prescription medicine, plus the same coverage for emergency care, hospitalization and surgery. The preventative care package is a helpful add-on that covers annual wellness exams, vaccines and lab tests. Hereditary conditions, dental disease, and behavioral issues are all covered.

Pumpkin plans average $40 per month.

Spot

Launched in 2019, Spot’s company chairman is none other than animal behaviorist Cesar Millan. In addition to coverage for accidents, illnesses, hereditary conditions, illness and more, Spot Pet Insurance covers alternative therapies like acupuncture, physiotherapy, chiropractic care, rehabilitative therapy, and hydrotherapy.

Spot plans average $29 per month.

Lemonade

Designed to be “insurance for the 21st century,” Lemonade operates through a user-friendly app that offers fast signup and claims. After taking a flat fee, The Lemonade Giveback donates unclaimed premiums to animals in need.

Lemonade plans average $10-25 per month.

ManyPets

ManyPets offers 100% reimbursement if you sign Fido up for a comprehensive plan and he is approved. Tailored coverage has no annual limits and unlimited claims payouts. Prescription medications, congenital conditions and even acupuncture are all covered.

ManyPets plans average $24-86 per month.

Embrace

Embrace Pet Insurance aims to make “ruff” days better by offering good prices for extensive coverage that covers most medical procedures, including dental illness, diagnostic tests and more. Embrace offers nose-to-tail coverage for accident and illness, and even breed-specific policies and coverage for congenital and chronic conditions. They also cover dental illness up to $1,000 per year.

Embrace coverage averages $40 per month. Their deductible lowers every year you don't make a claim.

ASPCA

ASPCA Pet Insurance offers one of the most extensive pet insurance packages in the market. Their Complete Coverage package provides reimbursement for exam fees and costs of diagnostics, accidents, illnesses, hereditary conditions and behavioral issues. The plan even covers costs of prescription food. Preventative care options can also be added.

ASPCA Pet Insurance plans average $40 per month.

Pet Insurance Terminology

"FYI, this is not insurance." Photo by Facebook.com/gohealthypaws

Understanding policy details will help you find coverage that works for you and your pooch, and prevent any unexpected costs if you need to make a claim.

Annual Maximum

Annual maximum, also known as payout limit, is the ceiling of reimbursement to expect from an insurer per policy term. Unfortunately, the extent of pet healthcare and cost is unknown, which is what insurance is designed to protect against. Finding a policy with a high or unlimited annual maximum will provide peace of mind when selecting a policy, but can raise premiums. Nationwide has an annual maximum of $10,000 for accident and illness coverage, and $400 for their basic wellness plan. If you don't want to worry about maximums, take a look at Healthy Paws, which has no limit on payouts per-incident, annual term, or lifetime of your pet.

Claim

An insurance claim is a formal request to your pet insurance company asking for a payment based on the terms of Fido's insurance policy. After you pay for veterinary care up front, you need to file a claim for reimbursement from your chosen insurance provider. Veterinary secretaries will often take care of claims for patients, but many pet insurance companies make it even easier for members to submit claims. Insurers like Spot and ManyPets allow you to file a claim by taking a picture of your bill and uploading it to their user-friendly app.

Copay

Copay is how much of a bill you are responsible for each time you bring Fido to the vet. Depending on the policy you choose, this is usually between 10-30% of the overall bill. Lower copays often mean higher premiums. Lemonade offers policies that cover 90% of your bill, leaving you to pay the other 10% of any veterinary bill received.

Coverage

Coverage refers to the amount of risk or liability that is covered for your pet by the insurer. Policy types vary and can be suited to most budgets and needs. There are three main types of coverage you can get for your dog:

  • Accident-Only protects owners from unexpected medical expenses related to accidents like poisoning, fractures, cuts and lacerations, bloat and injuries that require surgery. As the name implies, an accident-only policy does not provide any coverage for illnesses or other conditions that Fido may develop. If you're interested in purchasing accident-only coverage, Figo has one of the industry’s shortest waiting periods between signing up and coverage for accidents, starting at just one day. If you have a senior dog, consider Embrace Pet Insurance, which offers an accident-only plan to senior dogs when they age out of other plans at 15.
  • Accident and Illness offers more comprehensive protection than accident-only, and include coverage for vet-diagnosed sickness and disease. Most plans reimburse up to 90% of costs of everything from allergies to cancer, plus unexpected medical expenses related to accidents. Plans and policies vary by insurer. For example, Pumpkin has extensive accident and illness coverage that even covers dental illnesses and behavioral issues. Accident and illness coverage typically include hereditary and congenital conditions that are breed-specific, as long as your vet identifies the problem after the policy is in place. If your dog suffered any of these conditions before enrollment, they are considered “pre-existing” and won’t be covered by most insurers.
  • Wellness Plans are designed to help with the cost of common procedures that your pet is likely to need, rather than traditional pet insurance for unexpected medical costs. Wellness plans are available as add-ons with accident and illness pet insurance, and often have no deductible to meet. Pets Best offers EssentialWellness and BestWellness coverage for dogs of all ages to help cover costs of vaccinations, deworming, spay/neuter, wellness exams and more.

Deductible

Your deductible is the amount you have to pay out of pocket per year before insurance is activated, and is separate from copays. Similar to copay, lower deductibles means higher monthly premiums. You only have to meet your deductible once within a policy term, which means if your pooch needs more veterinary care after your deductible has been paid, you will need to pay it again until the policy resets (usually every year). ASPCA’s Complete Coverage plan offers deductibles of $100, $250 and $500. Embrace's deductible lowers every year you don't make a claim. If you don't want to pay any deductible at all, consider Pawp, which does not use copay or deductibles. Instead, you pay a flat fee for access to the Pawp Emergency Fund, which covers one emergency veterinary visit up to $3,000 per year.

Per Incident Limit

Per incident limit is the total amount that a pet insurance company will reimburse every time a new condition or disease occurs. The remaining cost will need to be covered by the policyholder. Avoid maxing out on any specific incident with a policy from Trupanion, which has no payout limits per incident, annual policy term or lifetime of your pet.

Policy Exclusions

Policy exclusions are veterinary fees that are not covered under a pet insurance policy. Pre-existing conditions, bilateral conditions (a health condition that is likely to occur on both sides of your pet’s body, like an ACL tear), alternative therapies and elective procedures that are not a medical emergency are all examples of policy exclusions. Most insurers also exclude alternative therapies from policies, but Spot Pet Insurance covers alternative therapies like acupuncture, physiotherapy, chiropractic care, rehabilitative therapy, and hydrotherapy. ManyPets covers bilateral conditions and treats injuries that occur on both sides of the body as a single illness.

Pre-Existing Condition

A pre-existing condition is an injury, illness or irregularity that your pet already suffers from at the time you sign up for a pet insurance policy. This can be anything from allergies to heart disease. Even conditions that have not been diagnosed at the time of enrollment can be considered pre-existing if the dog had signs of an issue in the past. It is recommended to insure your dog as early in their life as possible so they are covered in the event of a health condition arising, because pet insurance companies generally do not offer coverage for pre-existing conditions. If you are concerned that your pet may already have pre-existing conditions that won't be covered by an insurer, you can sign up with Embrace, one of the few companies that offer coverage for certain "curable" pre-existing ailments after a 12-month exclusion period.

Premium

Premiums are the monthly costs you pay for Fido’s coverage as determined by the policy. Premiums vary depending on how extensive the coverage is. Usually, policies with higher premiums offer more extensive coverage. Pawp offers cheaper monthly premiums that only protect against emergency veterinary costs, whereas companies like Trupanion and Pumpkin have higher premiums and cover everything from diagnostic tests to dental disease.

Reimbursement

Reimbursement is the percentage of veterinary bills an insurer will return after a claim is filed. Reimbursement usually covers between 70-90% of medical costs. Figo is one of the only companies to offer 100% reimbursement for new injuries and illnesses.

Waiting Period

Waiting periods are restricted periods of time at the beginning of a new pet insurance policy before your pet is eligible for reimbursements for any incident.They are found in all pet insurance policies, but vary by policy and insurer. For example, Lemonade has a waiting period of 2 days for accidents, 14 days for illnesses, and 6 months for cruciate ligament events.

Pet Insurance FAQs

"We have a few questions." Photo by Facebook.com/Trupanion

Still have questions? We have you covered.

When is the best time to buy pet insurance?

If you can, purchase pet insurance as soon as you welcome your new puppy into the home. Most insurers won’t cover hereditary illnesses or pre-existing conditions, but if you get coverage before these symptoms manifest, a number of companies will continue to cover your pet after the fact. Waiting periods are another reason why signing up for pet insurance early is the best bet, as you never know what and when a medical need may occur.

Do all companies treat “accidents” the same?

Cover for accidents is provided in complete pet insurance packages or offered as a cheaper alternative. Each company will have a different quota for determining an accident. ASPCA Pet Insurance considers torn ligaments, bite wounds, cuts, broken bones, swallowed objects, and toxic ingestions all accidents. Embrace includes bloat and car accidents in their accident-only plan.

Does insurance pay upfront?

The majority of insurers require medical costs to be paid upfront by the policyholder. It’s a good idea to set up a health savings account for your pooch in case the worst happens, so you have access to money for copays and upfront vet costs before reimbursements can be made. For those who want to avoid paying upfront, both Trupanion and Pets Best offer direct payments to the vet.

Is pet insurance worth the money?

Pet owners who don’t purchase insurance are banking on Fido never getting sick. In an ideal world, he never would and unexpected veterinary expenses would never occur. Sadly, this is not the case. Pet insurance can be a relatively cost-effective way to protect your pup and your wallet.

How much are pet insurance premiums?

Premiums can range from as little as $10 per month to more than $100 per month. Policies with higher premiums usually have more extensive coverage.

Can I insure my senior dog?

It’s never too late to purchase coverage. Learn more about how to insure your senior dog here.

Are hereditary illnesses and pre-existing conditions covered?

Unfortunately, pre-existing conditions aren’t usually covered by pet insurance. Embrace is one of the few companies that offers coverage for certain "curable" pre-existing ailments after a 12-month exclusion period. ManyPets will cover hereditary illnesses if your pup is already insured when symptoms begin to show.

How do I submit a claim?

All you have to do to make a claim is submit an invoice (often this will be done for you at the veterinarian office). Healthy Paws, Pawp and Spot all have user-friendly apps that allow you to upload your invoice and make a claim in seconds.

Does my pet insurance cover me while we travel?

If you and your outbound hound love to adventure together, pet insurance is especially important. Checking out new trails and surroundings can lead to a higher frequency of accidents, which is why covering your pet can prevent you having to dip into your travel savings during your next big trip. Although most insurers will reimburse members for veterinary care across the U.S., Embrace allows members to visit any general, specialist or emergency veterinarian across the United States, and in certain locations around the world.

Have you purchased pet insurance for Fido? Leave a comment or tweet us @BringFido!

Banner photo by Facebook.com/PetsBestInsurance.