How Does Pet Insurance Work?

Part of being a pet parent is ensuring that you can afford regular vet visits. However, accidents and illnesses can significantly increase the cost of veterinary care and may prove devastating to your budget.

To protect against these unexpected expenses, you can invest in pet insurance. You’ll pay a monthly premium to the insurance company, and if your pet should suffer from an accident or be diagnosed with a covered condition, the provider will reimburse you for some or all of the vet bill.

If you want to purchase pet insurance, it’s essential to know how it works so that you won’t be subject to any unfortunate surprises. We’ll provide a brief outline of what this type of insurance covers, what it won’t cover, and how and when you can expect to be reimbursed. Finally, we’ll provide recommendations for the best pet insurance to cover your furry friend.

You can plan your budget more easily around a regular premium than you can around the possibility of unexpected vet bills. Additionally, options are typically more straightforward than a human health insurance policy, and monthly premiums aren’t terribly expensive.

Waiting Periods

To prevent pet owners from purchasing pet insurance plans after their pet has an accident or is diagnosed with an illness, providers institute a waiting period between enrollment and when you can first file a claim. Typically, this will be at least 48 hours for an accident claim and 14 days for an illness claim. However, the waiting period may be up to a year for some orthopedic or hereditary conditions like hip dysplasia.

Policy Limits

Most policies put an annual limit on the dollar amount they’ll cover each year. Sometimes there is also a lifetime payout limit for the covered pet or a limit per incident or illness. A few plans have no limits, but they typically have very high premiums.

Deductibles

Your pet insurance deductible is the amount you’ll have to pay out of pocket before your pet insurance policy kicks in. Deductibles may be annual, so you’ll have to reach that amount every year before the provider starts paying. Typically, a low annual deductible plan will have a higher monthly premium and vice versa.

Alternatively, deductibles may be assessed per health problem. That means you’d have to pay separate deductibles on, for example, a broken leg and an arthritis diagnosis. However, once you reach the deductible for arthritis, the company will apply your reimbursement percentage to all future arthritis-related treatments.

Reimbursements

One thing that’s important to remember about pet insurance is that it’s more like property insurance than human health insurance. That means most pet insurance companies require you to pay the full cost of the vet bill up-front, and then you’ll file a claim and wait for reimbursement from your provider. The benefit of this system is that there’s no such thing as an “out-of-network” veterinarian—you can choose your vet. However, you will have to pay them directly when services are rendered.

Most plans will reimburse between 70% and 90% of this amount, presuming you’ve met your deductible but haven’t exceeded your coverage limit. Ultimately, that means a policyholder’s co-pay will be between 10% and 30% of the final bill.

Common Exclusions

Finally, no insurance plan will cover all health conditions. All pet insurance providers specifically exclude preexisting conditions—those that occurred or were diagnosed at any time before the end of the waiting period. Additionally, most policies exclude the following:

• Elective procedures (unfortunately, this typically includes spaying and neutering)
• Cosmetic procedures (tail docking, declawing, etc.)
• Transportation
• Boarding
• Grooming
• Breeding/pregnancy care
• Funeral/memorial costs

Additionally, coverage for congenital conditions, hospitalization, microchipping, dental care, and behavioral treatments may be excluded, or it may only be available as an add-on. Make sure you check any plan’s exclusions before you commit to it.

Alternatively, some plans only cover accidents like injuries, ingesting toxic substances, or choking. Some companies also offer wellness coverage that applies to preventive care. These wellness plans help pay for regular exam fees, vaccinations, heartworm medication, and even some lab tests.

Accident-and-illness coverage will typically save you the most money, should you need to use your policy, since fees for diagnosis, medication, X-rays, and more add up quickly. Wellness coverage will generally allow you to break even over the course of a year, costing about as much as a year’s worth of wellness care. However, it will allow you to spread out the cost evenly by month instead of paying larger sums at once.

According to a 2020 Pawlicy Advisor survey, about 82% of pet insurance policies consisted of dog insurance, and the other 18% consisted of cat insurance. Indeed, most pet insurance companies only offer plans for cats and dogs. However, Nationwide offers insurance for birds and exotic pets, including ferrets, iguanas, turtles, and more.

However, when it comes to accidents and serious illnesses, you may save a substantial amount of money if you have pet insurance. Of course, given the waiting period and exclusion of preexisting conditions, you’ll have to have purchased your policy before these incidents happen.

*Quotes based on a 4-year-old, medium-sized, mixed-breed dog in Raleigh, N.C.

Lemonade is our top pick based on its excellent balance of value for money and comprehensiveness of coverage. Although it offers a single accident-and-illness plan, you have the option to add on coverage for preventive care, vet visit fees, or physical therapy. In addition, the cost of pet insurance from Lemonade is some of the lowest available and generally ranges from $15–$30 a month for dogs and $9–$15 a month for cats.

Spot: Most Customizable Plans

Spot offers two pet insurance plans: one just for accidents and another covering both accidents and illness. You can also add Gold or Platinum Preventive Care options for a flat rate with either plan. You can further customize your coverage by choosing the amount of your deductible and your total coverage limit, and Spot even offers plans with unlimited coverage. Add your contact info to this simple form to find out how much a Spot pet insurance plan could cost you.

Embrace: Best Deductibles

Embrace pet insurance tends to cost a little more, but you have five deductible options and coverage limits to choose from. There’s a single accident-and-illness plan, though you can also add a routine care plan to your coverage. Additionally, your deductible will decrease over time with Embrace’s Healthy Pet Deductible benefit. For more information or a free quote, visit Embrace’s website and fill out this easy form.

The This Old House Reviews Team is dedicated to thorough, in-depth reviews of each product or service that we detail in our content. Determined to build trust with our readers through transparency, accuracy, and accountability, we’ve built a detailed rating system to score pet insurance brands. Included in this methodology are the following six factors with their respective scoring weights:

• Coverage (25)
• Plan options (20)
• Monthly cost (20)
• Company reputation (15)
• Customer service (10)
• Species eligibility (10)

Our researchers keep all data in each company’s score up to date, making any changes to our content when necessary to provide our readers with the most accurate information on relevant metrics, such as plan options, customer service, reputation, and monthly cost.

To share feedback or ask a question about this article, send a note to our Reviews team at reviews@thisoldhousereviews.com.