Is Pet Insurance Worth It?

Adoption rates have risen across the country as more people search for companionship while they work from home and endure various stages of quarantines and lockdowns. Some shelters, such as Riverside County Animal Shelter, in Riverside, Calif., have reported that they are empty due to high demand.

But if you’re contemplating adopting your first (or second) animal, you’ll need to budget for more than just chew toys and food. Like humans, furry friends can contract serious diseases or get injured in an accident that could end up costing you thousands of dollars for care. To ease your mind—and reduce the risk of a major vet bill—you may want to invest in pet insurance.

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. Bortz bought a policy from Trupanion, a major provider.

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“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.

At the end of 2019, more than 2.5 million pets were insured in the U.S., up more than 15% from 2018, according to the North American Pet Health Insurance Association. However, advances in treatment have led to higher bills, and so pet insurance premiums have risen as well. According to the same report, the average accident and illness premium for a dog was about $585 a year in 2019, up from $566 in 2018. (Cats are less expensive to insure than dogs, with an average accident and illness premium of $350 in 2019.)

“The advances in veterinary medicine have been phenomenal over the past five years,” 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.”

For example, if you have a large dog, the cost to repair a cruciate ligament tear in a knee—which happens when your dog stops too quickly while playing fetch—was about $1,200 five years ago. Today, the procedure can cost $5,000 (per knee) because vets now install a steel plate to help stabilize the ligament.

But comprehensive coverage isn’t the only option for pet parents, and premiums can vary depending on geography and other factors. Here’s what to consider.

Pet Insurance Plans

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. 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.

Veterinarians and insurance experts suggest that owners look for a policy that covers the unexpected, because it’s difficult to plan for those costs. Let’s say your dog or cat is hit by a car. A week in a veterinary hospital could cost you $10,000 or more, plus the ongoing care to treat accident-related injuries. Insurance reduces the shock to your wallet while enabling you to avoid the heartbreak of having to put your pet down because you can’t afford treatment. Accident and illness coverage also comes in handy if your pet needs tests to diagnose an illness.

Dog owners Sara Babb and her husband, Brandon Trimble, of Arlington, Va., discussed the benefits of pet insurance after adopting Phoebe, a poodle mix, in 2019. “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.

You can lower premiums by opting for accident-only coverage. According to the North American Pet Health Insurance Association, the average cost of an accident-only policy for a dog was $194 in 2019; cat owners paid an average of $126 for accident-only coverage.

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 may not be able to get some illnesses covered because most policies exclude pre­existing conditions. However, that doesn’t necessarily mean you should rule out insurance altogether.

“Even if, for example, your dog has a preexisting kidney condition, there are literally dozens of other scenarios that could be covered—cancer, emergency surgery for a GI 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. For example, for a one-year-old Labrador retriever in Manhattan, N.Y., premiums start at $43 a month for a Nationwide policy that covers accidents, illness and some wellness (such as heartworm prevention), but they start at $28 a month for the same dog in Manhattan, Kan. (For a one-year-old Himalayan cat living in Manhattan, Kan., premiums start at $13 a month, compared with $21 for its New York City counterpart.)

Deductibles, Claims and Fine Print

Before signing on any dotted line, make sure you know your policy’s deductible, reimbursement rate and maximum payout. 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. If your finances and your pet are in pretty good shape, a per-incident deductible may be your best option because you may not be visiting your vet often. However, if your pet is a serial ribbon eater, opt for a policy with an annual deductible. Once you decide which type of deductible your finances can handle, compare insurers’ maximum policy payouts, as caps on the amount they’ll pay may 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 may put a cap on coverage after the second incident, because you may have exceeded the per-incident amount, says Claudine Sievert, a doctor of veterinary medicine in Manhattan, Kan., and a consultant for CatPet.club, a cat enthusiast website.

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. (Veterinarian offices usually don’t offer payment plans, either, though some may through a third-party service.) Reimbursement rates start as low as 70% but can go up to 90% of the cost of treatment.

Once you’ve reviewed the premiums, deductibles and reimbursement rates for different policies, turn to the fine print. Most pet insurance 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 may not have coverage for up to 30 days.

To find and compare policies, go to petinsurancereview.com or petinsurancequotes.com. If you have more than one pet, most companies will cover all of your animals under one policy, and you may receive a discount for doing so. ASPCA Pet Health and Embrace Pet offer a 10% discount for multiple pets. Nationwide offers 5% on your second or third pet, and the discount goes up to 10% once you add a fourth.

Many large property and casualty insurance companies offer pet insurance through a partner that underwrites the policies. For example, last spring, State Farm announced a partnership with pet insurance giant Trupanion. Allstate offers existing clients a pet insurance policy from Embrace that gives policyholders $50 cash back every year they’re claim-free. Starting this year, you’ll be able to buy pet insurance directly from Allstate even if you’re not an existing customer.

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 preventative care, and save money for emergencies. While it may not be realistic to sock away $10,000 for your cat, you should have between $1,000 and $2,000 set aside, Sievert says.

That’s what experienced cat owner Martha Craver and her partner decided to do for their three nine-year-old cats. One cat has diabetes and needs daily insulin shots, but all of 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 was able to 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 may be able to point you to a lower-cost option if your preferred veterinarian quotes a price out of your range. Or, 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 may be able to save money by having the procedure performed in a less expensive location, even if it means staying in a hotel.

Lower the Cost to Spay or Neuter

If you adopted a kitten or puppy from a friend or bought one through a breeder, spaying or neutering is in your future. And even if you have pet health insurance, your plan may not 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, Emancipet, a group of nonprofit pet clinics based in Austin, Texas, offers spay/neuter surgeries for $69. The clinic group also has periodic free days in which members of the community can receive these services at no cost. PetSmart Charities has a database of low-cost spay/neuter clinics across the country.

If you adopt your pet, you may not have to worry about spay/neuter costs. 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 Society of the United States.