Key takeaways

  • Pet insurance has three plan types: accident-only, accident and illness, and wellness and preventive care.
  • Deductibles are upfront costs, while reimbursement rates determine how much the insurance pays back.
  • Owners must submit claims to get reimbursed for covered vet expenses.
  • Pet insurance value depends on your pet's health, budget and peace of mind.

Pet insurance is a financial safety net that can bear the brunt of hefty veterinary bills. This type of insurance covers pets in case of accidents, illnesses or other medical issues. You can also purchase add-ons, such as wellness and preventive care packages, to add extra layers of coverage for your pet.

It’s important to understand how pet insurance works before deciding whether it’s worth it. For a comprehensive overview, that means knowing what is and isn’t covered, the costs and how your bills will be reimbursed.

How pet insurance works

The intricate details and fine print of pet insurance policies are important, but they can all confuse those unfamiliar with insurance lingo. What you need to know about how pet insurance works can be broken down into three key concepts.

1. Types of pet insurance plans

Here are the three main types of pet insurance plans available:

  • Accident-only: Typically covers unexpected injuries.
  • Accident and illness: Covers unexpected injuries and a broader range of medical issues
  • Wellness and preventative care: Includes things like routine checkups and vaccinations

Insurance companies offer different types of plans and details of coverage. Some companies offer one comprehensive plan, while others provide customizable plans with add-ons for tailored coverage. Below, we’ll explore more details of what’s covered under each type of plan.

2. Deductibles and reimbursement rates

A deductible is the fixed amount of money you are responsible for paying for a covered vet bill out of pocket before your insurance company will reimburse you.

Think of the deductible as a down payment on your pet’s care. The higher your deductible, the lower your premiums will be. Some companies offer a “lifetime per condition” deductible, but others have customizable deductibles ranging from around $0 to $2,500. The deductible options vary from one insurer to the next, so look for a deductible and premium combination that works for your budget and needs.

A reimbursement rate (or payout percentage) is the percentage of the covered veterinary bill the insurance company will pay back after you’ve paid your deductible.

In many cases, the higher the reimbursement percentage, the higher your premiums will be.

Dollar Coin
Here's an example of how a reimbursement amount is calculated
Let’s say Fido breaks his leg and needs surgery. The surgery costs $1,000. Your plan has an 80% reimbursement rate and a $250 deductible.

  1. Subtract the deductible ($1,000 – $250 = $750).
  2. Multiply that number by your reimbursement rate (80%) to find your insurance coverage amount ($750 x .8 = $600).
  3. You’d pay the remaining $400 ($1,000 – $600).

Understanding this formula helps you estimate how much pet insurance will contribute to your pet’s care.

Who pays the vet?

Apart from your deductible, the vet bill is the other out-of-pocket amount you’ll have to pay. That is unless your insurer offers vet direct pay. If both your insurer and your vet accept direct vet pay, the insurance company pays the vet directly.

If not, you have to pay the bill and file a claim to receive your reimbursement.

What do vets think about pet insurance?

Veterinarians frequently deal with uninsured pet owners, and it’s difficult for everyone involved.

“As a veterinarian, I frequently encounter pet owners who haven’t insured their beloved companions,” says Dr. Melissa Meyer, a veterinarian at Boksburg Animal Hospital in Gauteng, South Africa. “This oversight can lead to significant financial strain when unexpected medical expenses arise. Investing in pet insurance not only provides peace of mind but also ensures that your pet receives the best possible care without financial burden.”

3. Claims and reimbursement

The claims process varies between insurers. Some claims are easy to submit via an app or online portal; others may have to be sent via email, mail, fax or phone. In most cases, you must submit an invoice or receipts and answer some questions to file your claim.

Next, you wait for the claim to be processed and for the insurance company to reimburse you. Some pet insurance companies process claims in minutes (if not instantly), whereas others may take over a month. Insurance companies generally reimburse the final amount via direct deposit or a check in the mail.

What pet insurance covers

The following list of categories and examples can give you an indication of what pet insurance generally covers. However, not all insurance companies cover all of these, and some cover things not on this list.

    • Ingestion or inhalation of foreign objects
    • Injuries from falls, car accidents or fights with other animals
    • Acupuncture
    • Chiropractic care
    • Training sessions to mitigate separation anxiety
    • Training sessions to remedy behavioral problems
    • Hospital stays (for treatment of covered conditions)
    • Allergies
    • Cancer treatments
    • Chronic diseases
    • Infections
    • Emergency surgeries due to accidents or illnesses
    • Spaying or neutering
    • Parasite prevention medications or treatments
    • Regular checkups
    • Spaying or neutering
    • Vaccinations
    • Breeding costs
    • Hydrotherapy
    • Nail care and grooming
    • Newborn puppies or kittens
    • Physiotherapy
    • Specialized pet food
    • Supplements
    • Vet exams
    • Weight loss programs

What pet insurance does not cover

As before, the following list is by no means conclusive. For example, most insurers don’t offer coverage for exotic pets or newborn puppies, but that doesn’t mean you won’t find a company with a plan that will. Pre-existing conditions can also be a gray area and must be considered carefully when shopping for pet insurance.

    • Expenses associated with breeding your pet, for example, whelping or C-sections
    • Cosmetic surgeries such as tail docking or ear cropping
    • Dental cleaning or descaling
    • Routine grooming and nail care
    • Any illnesses or injuries your pet had symptoms of or received treatment for before the policy began.
    • Some plans may offer limited coverage for pre-existing conditions after a waiting period. These conditions are often referred to as “curable pre-existing conditions.”
    • Parasite prevention medication or treatments
    • Routine checkups
    • Vaccinations

Pet insurance waiting periods

Another important element of grasping how pet insurance works is understanding waiting periods. A waiting period is the time between your policy’s start date and when your coverage begins.

Unless specified otherwise, your coverage doesn’t start until a set time has passed. For example, if Fido breaks his leg two days after your pet insurance application is accepted, treating the broken leg won’t be covered.

Some insurance companies may pay out for the claim but not cover any costs related to the injury in the future. This is particularly true for conditions such as cruciate ligament injuries.

Pet insurance costs

Pet insurance premiums vary significantly. Here are some of the factors that impact how your policy costs are calculated:

  • Age: Younger pets typically have lower premiums than older pets.
  • Breed: Certain breeds with higher health risks may have higher premiums.
  • Coverage type: More comprehensive plans with higher coverage limits will cost more.
  • Deductible: Choosing a higher deductible can lower your monthly premium.
  • Location: Veterinary costs can vary by region, which can affect premiums.
  • Species: Generally, dog insurance is more expensive than cat insurance.

How to decide if pet insurance is worth it

Many factors determine the value of pet insurance, and only you can decide if pet insurance is worth it for you. Consider the following to help you answer that question:

  • Peace of mind: Knowing you’re prepared for unexpected vet bills can be a valuable benefit.
  • Your budget: Consider whether you can comfortably afford the monthly premiums and potential out-of-pocket costs like deductibles.
  • Your pet’s health: If your pet is prone to health problems, insurance can provide peace of mind and financial protection.

Of course, it’s also critical to understand the full scope of coverage to avoid any disappointment or unpleasant surprises.

“It’s disheartening to witness the frustration and disappointment of pet owners when they discover their insurance coverage falls short of expectations,” says Dr. Meyer. “Too often, we encounter situations where pet treatments are delayed or compromised because of misunderstandings about insurance details. This lack of clarity can lead to heartbreaking outcomes where we, as veterinarians, find our hands tied in providing optimal care.”

Alternative financing solutions for vet care

If you decide pet insurance isn’t worth it, there are other ways to finance your pet’s veterinary costs. Here are a few simple examples that can help you finance your pet’s medical care:

  • Car insurance: You may already have coverage for your pet under your car insurance policy.
  • Employee benefits: Some insurance companies offer businesses and companies employee or group discounts.
  • Medical credit card: Opening additional credit can be risky, but it may work in some situations. For instance, you could consider opening a zero-interest promotional card for a large unplanned expense and paying it off before the interest-free period ends.
  • Pet loans: Weigh the pros and cons of getting a loan and make an informed decision on whether a pet loan makes financial sense in your case.
  • Pet savings account: You can open a savings account specifically for pet expenses, ensuring you always have money to cover the unexpected.

The bottom line

For many people, unexpected veterinary bills can be a massive financial burden. Pet insurance can cover accidents, illnesses, wellness or preventative care for your furry friends. By understanding how pet insurance works, with its deductibles, reimbursements and coverage options, you can decide if it’s the right financial tool to keep your pet healthy and happy.

The next step is to start shopping around for a company with a policy that fits the bill. Work your way through the best pet insurance companies and compare what each has to offer before deciding.