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What is pet insurance and how does it work?

How does pet insurance work?

There are a few things you should be familiar with when shopping for pet insurance. First, pet insurance doesn’t work the same as human health insurance. When you get a bill from the vet, you pay it in full and submit it along with a claim to your pet’s insurance company. Once approved, the insurance company reimburses a percentage of the cost.

An injury or illness can happen at any time, and pet insurance provides protection in multiple ways. You get the assurance that your pet will always receive the necessary treatment for health problems, and you’ll never pay hefty vet bills without the help of insurance.

Some pet owners refuse to get a pet insurance policy, assuming that the monthly premium costs over the life of their pet will exceed the costs of some medical bills. Read on to learn about pet insurance costs and conditions commonly covered for cats and dogs.

How do pet insurance prices work?

Your monthly pet insurance premiums are based on three main factors: annual limits, deductibles, and reimbursement rates. Let’s take a closer look at each.

Annual coverage limit

Your annual coverage limit is the maximum amount your provider can reimburse for pet care each year. These limits can range from $2,500 to unlimited. The lower the annual limit, the lower your monthly payments.

If your pet’s breed is predisposed to certain genetic conditions, you may want to consider a higher coverage limit, as your veterinary costs are likely to be higher. If your pet is still a puppy or kitten, a lower level of coverage may be more appropriate, as it is less likely to face serious health conditions.


Your deductible is the fixed amount you must pay before your pet insurance provider begins to reimburse you for claims. Pet insurance deductibles can range from $100 to $1,000. Contrary to the coverage limit, the higher the deductible, the lower your monthly costs.

Deductibles are typically annual, meaning you must meet that amount each year before receiving payments. However, some providers use a per-condition deductible, which means you will have to pay a new deductible each time your pet is diagnosed with a new condition. For example, if your dog has been diagnosed with skin allergies and needs medication for life, he’ll only pay a one-time deductible for that condition.

reimbursement rate

Pet insurance works differently than the health insurance we use for ourselves. Pet owners pay vet bills in advance when their dog or cat receives care (vet, emergency, hospitalization, etc.). They then submit a claim to their pet provider. If approved, the pet insurance company will reimburse the cost, usually by check or direct deposit (once the deductible has been met).

Many providers offer a 70% to 90% reimbursement rate. The lower your reimbursement rate, the lower your monthly payment, but the more you will pay out of pocket for care. For example, if you select a 90% reimbursement rate and your pet’s treatment is $500, your provider will reimburse you $450 less your deductible. However, if you select a 70% reimbursement rate and your first vet bill is $500, your provider will reimburse you $350 less your deductible.

Cost factors to consider

Remember that a low coverage limit, low reimbursement rate, and high deductible will substantially reduce the cost of your monthly premiums. The downside is that there will be more out-of-pocket costs to incur when you file a claim.

Many providers offer discounts that can help with monthly costs. For example, Lemonade offers a 10% discount for customers who combine their pet insurance with a homeowners or renters policy. Compared, Search offers a 10% discount to pet owners who have rescued or adopted their pet from a shelter.

What does pet insurance usually cover?

There are two types of pet insurance coverage: accident only and accident and illness. Some providers also offer preventive or wellness care add-ons. Coverage varies by provider, so be sure to narrow down your options to those that meet your pet’s needs.

Accident-only coverage is the most basic and cost-effective option. These plans only cover accidents, injuries, or emergencies and typically include the following:

  • Animal bite wounds
  • Broken bones
  • cuts
  • swallowed objects
  • toxic ingestions

Accident and illness coverage is the most common and comprehensive plan. These policies cover everything in the plan for accidents only plus illnesses and conditions, including the following:

  • allergies
  • Arthritis
  • bladder infections
  • Cancer
  • chronic conditions
  • congenital conditions
  • Diabetes
  • Gastrointestinal disorders
  • Heart disease
  • hereditary conditions
  • Hip dysplasia

Accident Only and Accident & Sickness plans cover the following treatments and procedures:

  • Diagnostic tests (MRIs, X-rays, ultrasounds)
  • Hospitalization
  • Prescription drugs
  • Surgery

Some providers cover alternative therapies, dental care, behavioral disorders, microchipping, exam fees, prescription foods, and dietary supplements, but these are not offered across the board.

Several providers have optional preventive care add-ons for routine care. They cover specific services up to a certain dollar limit and can be added to your base policy for a monthly fee. Routine care packages generally cover the following treatments:

  • Blood test
  • dental cleanings
  • deworming
  • Flea and tick prevention
  • spay/neuter
  • vaccines
  • wellness checkups

You may want to add more extras, such as lost pet advertising, end-of-life coverage, or reimbursement for vacation plans canceled due to a sick pet. trupanion Y figure We offer optional add-on care packages for circumstances like these that extend beyond the vet’s office.

Learn more: Pet Insurance Facts and Statistics

What does pet insurance not cover?

All pet insurance providers have exclusions. Here are some standard exclusions for almost all policies:

  • Breeding
  • shipping costs
  • Cosmetic or elective procedures
  • Cleanliness
  • pre-existing conditions

What are pre-existing conditions?

Pre-existing conditions are those for which your pet showed symptoms, was diagnosed, or received treatment before your pet insurance policy began. They include any illness or injury that may occur during your policy’s waiting period, or the period of time between your enrollment in a plan and the time you can start filing claims.

No pet insurance provider covers pre-existing conditions. However, some companies distinguish between curable and incurable conditions, choosing to cover curable conditions with specific requirements. Embrace, Place and ASPCA all make these distinctions.

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