How Does Pet Insurance Work, and What Are My Options?

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3 types of pet insurance
Pet insurance deductibles, reimbursements and more
Building a pet emergency fund
Low-cost spay and neuter options

A King Charles Spaniel sits on an exam table beside a vet and his owner.

Once a niche product, pet insurance policies have increasingly gone mainstream, and there are more options, too.

Freelance writer Daniel Bortz and his wife, Alexandra, signed up for pet insurance for their mini goldendoodle, Penny, after their breeder provided them with a month's coverage for free. After learning how pet insurance works, Bortz bought a policy from Trupanion, a major provider.

"Penny has had a couple of ear infections so far — her breed is prone to getting them — but our main concern was an emergency," Bortz says.

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Advances in treatment have led to higher bills, and pet insurance premiums have risen as well. The average accident and illness premium in 2024 for a dog was around $749.29 annually, while cat owners paid $386.47 annually, according to the North American Pet Health Insurance Association.

"The advances in veterinary medicine have been phenomenal," says Rob Jackson, cofounder of Healthy Paws Pet Insurance and Foundation. "There's hardly a thing that we can’t do for our four-legged family member."

But comprehensive coverage isn't the only option for pet parents, and premiums can vary depending on geography and other factors. Here's how pet insurance works and what to consider when comparing policies.

3 types of pet insurance

Just as you can pick a health policy that best matches the needs of you or your family, you can also select one that's a good fit for your pet. Pet owners can typically choose from three types of coverage: Accident and illness, accident-only, and wellness plans.

Accident and illness pet insurance

Accident and illness pet insurance is the most comprehensive type. As the name implies, it covers treatment related to accidents, such as getting hit by a car or eating something toxic. But it also covers illnesses, such as allergies, ear infections or cancer.

Dog owners Sara Babb and her husband, Brandon Trimble, of Arlington, Virginia, discussed the benefits of pet insurance after adopting Phoebe, a poodle mix.

"Brandon was afraid that if Phoebe got really sick, he would make an emotional decision and spend $20,000 for care," Babb says.

The couple decided on an accident and illness policy from pet health insurer Figo. Premiums for the first year were $213.

Babb and Trimble bought insurance while their dog was still young and healthy. That's a smart move. If you put off buying insurance until your pet is older (or adopt an older pet), you might not be able to get some illnesses covered because most policies exclude pre-existing conditions.

However, that doesn't necessarily mean you should rule out insurance altogether.

"Even if, for example, your dog has a pre-existing kidney condition, there are literally dozens of other scenarios that could be covered—cancer, emergency surgery for a GI (gastro-intestinal) obstruction, getting hit by a car and ear infections," says Jennifer Fitzgerald, CEO of Policygenius.com, an insurance comparison site.

Age and health aren't the only things underwriters consider. Your animal's breed and your ZIP code will also factor into how much you'll pay in premiums.

Accident-only pet insurance

If you want to save on pet insurance without giving up all coverage, you can lower premiums by opting for accident-only coverage. Your pet will still be covered for accidents, but you'll pay for treatment related to illnesses yourself.

According to the North American Pet Health Insurance Association, the average cost of an accident-only policy for a dog was $204 in 2023; cat owners paid an average of $116 for accident-only coverage.

Wellness plans

Wellness plans tend to cover preventive-care visits, such as routine vaccinations, and you can buy one as a stand-alone policy or as an add-on to an accident and illness policy.

The most popular policies are accident and illness plans, says Ashlee Tilford, managing editor of Insurance.com and proud owner of Allie, a lab-hound mix.

Many veterinary clinics also offer wellness plans. You'll usually pay for these up front in annual or monthly installments. They're a great way to keep compliant with all shots and checkups, while also saving money on basic services.

Pet insurance deductibles, reimbursement rates and other fine print

A vet listens to the heart and lungs of a dog.

Before signing on any dotted line, make sure you know your policy's deductible, reimbursement percentage, annual limit and other key details.

Deductibles

Pet insurance deductibles range from $100 to $1,000 and, as with human health insurance, the lower the deductible, the higher the premium.

You should also determine whether the deductible is applied on an annual basis or a per-incident basis. Per-incident deductibles need to be paid in full for each incident, as you typically do for car insurance or home insurance. An annual deductible only has to be met once for the year, similar to health insurance.

If your finances and your pet are in pretty good shape, a per-incident deductible might be your best option because you might not be visiting your vet often and the policy is usually a bit cheaper. However, if your pet is a serial ribbon eater, opt for a policy with an annual deductible.

Reimbursement percentage

Even if you have pet insurance, you're expected to pay for services at the time of treatment, then apply for reimbursement of covered costs.

Reimbursement rates start as low as 70% but can go up to 90% of the cost of treatment.

After you've paid for treatment and the claim is approved, the insurer will pay that percentage of your vet bill, minus any deductible.

Say your dog swallows a toy while playing. The vet must perform surgery to remove it, resulting in a $3,000 bill. If you've already met your deductible for the year and opted for 90% reimbursement rate, your insurer would reimburse you $2,700 for the emergency visit.

Annual limit

Once you decide which type of deductible your finances can handle, compare insurers' annual limits or maximum policy payouts. This refers to the maximum amount the insurer will reimburse in a given year.

These caps on the amount they'll pay might also be based on an annual or per-incident basis. Suppose, for example, your cat eats a lot of yarn, requiring four surgeries in a year.

The insurance company might put a cap on coverage after the second incident, because you might have exceeded the per-incident amount, says Claudine Sievert, a doctor of veterinary medicine in Manhattan, Kansas, and a consultant for CatPet.club, a cat enthusiast website.

Waiting period

When you first buy pet insurance, most providers have a waiting period before coverage kicks in. You can typically file a claim 14 days after signing up for your policy, but you might not have coverage for up to 30 days.

In policies that offer coverage of certain curable pre-existing conditions, the waiting period to file a claim related to that condition might be even longer.

To find and compare policies, go to petinsurancereview.com or petinsurancequotes.com. If you have more than one pet, most companies will cover all your animals under one policy, and you might receive a discount. ASPCA Pet Health and Embrace Pet offer a 10% discount for multiple pets.

Building a pet emergency fund

Whether you spring for pet insurance or decide to pay out of pocket, monitoring your pet's diet and exercise and staying up to date on needed vaccines are crucial to keeping your pet from needing emergency care — and keeping your costs down.

Even knowing the most common aliments associated with your pet can prevent a minor problem from turning into something major. If you decide not to buy pet insurance, make room in your budget for basic preventive care, and save money for emergencies.

While it might not be realistic to sock away $10,000 for your cat, you should have from $1,000 to $2,000 set aside, Sievert says. With right savings account, you can reach this goal more quickly.

That's what experienced cat owner Martha Craver and her partner decided to do for their three nine-year-old cats. One has diabetes and needs daily insulin shots, but all the cats are kept indoors, which limits their exposure to accidents and disease.

The couple stash away $30 a month, and the fund has come in handy. Some years ago, their cat Archie needed surgery to remove a ribbon that he ingested. The price tag: $1,600. Around the same time, Archie had an echocardiogram, which set them back another $400. Even though each bill was a shock, the couple could write a check for the services.

The rule about shopping for a policy that fits your needs also applies to shopping for affordable care. Your local humane society might be able to point you to a lower-cost option if your preferred veterinarian quotes a price out of your range.

If you're up for a road trip and the event isn't life-threatening to your pet, check out prices in neighboring states. If you live in a high-cost area, you might be able to save money by traveling to a lower-cost area to have the procedure performed, even if it means staying in a hotel.

Low-cost spay and neuter options

A puppy and kitten get close together on a sofa.

If you adopted a kitten or puppy from a friend or bought one through a breeder, spaying or neutering is in your future. Even if you have pet health insurance, your plan usually doesn't cover this procedure, so it pays to shop around.

Daniel Bortz and his wife, Alexandra, didn't find a policy that covered spay surgery for Penny, their miniature goldendoodle, and their preferred vet quoted a price of $700. Bortz found another vet in their area who offered to perform the surgery for $400.

You can also ask your local humane society about low-cost clinics or conduct a quick internet search. For example, Ohioans can take advantage of many low cost spay and neuter options through the Ohio SPCA.

If you'd rather skip the cost of spaying or neutering altogether, adopt your pet from a shelter or humane society.

Local shelters typically spay or neuter animals that come into their care, and also provide vaccinations, says Lindsay Hamrick, companion animals policy director at the Humane World for Animals.

Rivan joined Kiplinger on Leap Day 2016 as a reporter for Kiplinger's Personal Finance magazine. A Michigan native, she graduated from the University of Michigan in 2014 and from there freelanced as a local copy editor and proofreader, and served as a research assistant to a local Detroit journalist. Her work has been featured in the Ann Arbor Observer and Sage Business Researcher. She is currently assistant editor, personal finance at The Washington Post.

With contributions from