What Is Pet Insurance And How Does It Work?

What Is Pet Insurance And How Does It Work?

What is Pet Insurance?

Just as a healthcare policy covers medical and surgical expenses for an individual, Pet Insurance does the same for your pet. Medical expenses can be very high, not just for you but also for your beloved pet. In the event of an unexpected illness or accident, a Pet Insurance policy can prove highly beneficial.

Pet Insurance helps you cover medical costs for your pet in the case of accidents and illnesses. Some providers may also provide life and theft coverage for valuable animals. These providers payout in case your animal dies or gets stolen. 

Typically, you pay monthly premiums for your Pet Insurance, which may account for a few hundred dollars per year. You will be reimbursed for most of the medical treatments for your pet. However, you need to pay the costs upfront, which gets reimbursed later on. Once you have paid the vet bills, you can file a claim for reimbursement from your Pet Insurance provider.

Even though Pet Insurance can cost you a few hundred dollars a year, it can be a lifesaver in the event of an untoward incident. Many pet owners cannot afford the medical procedures and are forced to put down their pets.

Veterinary costs can amount to thousands of dollars. Radiation therapy for dogs suffering from cancer can cost between $5,000 and $10,000. Surgery to remove a tumor could cost up to $6,000. You can cover such major costs by just paying about $30 to $40 per month towards your Pet Health Insurance.

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What Is Pet Insurance?

What Animals Can Pet Insurance Cover?

Pet Insurance is available for the following animals: 

  • Dogs
  • Cats
  • Rabbits
  • Ferrets
  • Exotic reptiles like snakes, iguanas, and tortoises
  • Exotic birds like parrots and cockatoos
  • Exotic mammals like pygmy hedgehogs and micro pigs
  • Horses
  • Pigs
  • Several rodents

Most Pet Insurance companies in the United States do not cover exotic pets. You may need an exotic insurance plan for such pets. 

How Does It Work?

Many pet owners do not proactively buy Pet Insurance. They think of it only when the pet falls sick or gets injured. To prevent people from getting insurance for their already sick pets, insurance providers have introduced a waiting period. The period between when you buy your insurance and when the coverage begins is called the waiting period. For accident coverage, the waiting period maybe a few days while it could be a few months for illness coverage.

You may also need to get a medical examination of your pet done to check for any pre-existing conditions.

How Pet Insurance works is that you first pay for your pet's medical expenses out of your pocket. You then file a claim for reimbursement with the insurance provider. Your provider reviews the claim and will reimburse you the costs, fully or partially, if the claim is approved. The process may take between 3 to 5 days or longer for complicated claims. The amount that is reimbursed to you depends on how your Pet Insurance plan is structured.

The main parts of your Pet Insurance plan are the following:

  • Annual deductible: The annual deductible is a fixed amount that needs to be met in a policy period before the insurer begins to pay for your claims. The amount may range between $0 and $1,000.
  • Reimbursement level: It is the percentage of the medical bill that will be reimbursed by the insurance provider after the deductible is paid. It may vary between 50% and 100%.
  • Annual max: The annual max is the amount that your insurance provider will pay in veterinary expenses each year. If the medical expenses go beyond the annual max limit, you will need to pay them yourself.

Let us explain with an example. Say you purchase a plan that has-

Annual deductible: $50

Reimbursement level: 100%

Annual max: $10,000

Your dog gets into an accident, and the medical bills total up to $15,000. 

You will need to pay $50 towards your deductible. Your insurance provider will reimburse you $10,000 because that is the maximum yearly limit. You will have to bear the remaining $4,950 on your own.

What Does It Cover?

The coverage depends on the type of insurance plan. There are no Pet Insurance plans that cover any pre-existing conditions in your pet. However, some insurance providers may cover curable conditions, provided you meet the waiting period and no complications arise during this period. 

There are no minimum coverage laws that cover Pet Insurance, unlike human health insurance. Most insurance providers do, however, provide substantial illness coverage, along with accident coverage. 

Mostly all Pet Insurance plans cover the following: 

1. Illnesses

With illness coverage, your insurance plan may cover many major and minor illnesses. You may get reimbursed for major illnesses like cancer and arthritis and minor illnesses like ear infections and digestive troubles. Illness coverage may cover everything from diagnosing to treatments.

2. Accidents

Accident coverage may help meet the medical expenses if your pet injures itself in an accident. It may cover injuries like torn ligaments, broken bones, cuts, toxic ingestion, and swallowed objects. It may also cover other procedures like X-rays, MRI, ultrasounds, sutures, bloodwork, hospitalization, and surgery.

3. Veterinarian Fees

Most policies cover vet fees incurred during illness or accidents. Some policies may also cover dental work for dental injuries that occur during accidents.

4. Alternative Therapies

Some policies may cover alternative therapies that may be necessary for your pet to recover from illness or accidents. Alternative therapies like physiotherapy, acupuncture, rehabilitative therapy, and chiropractic care may be covered under some policies.

5. Prescription Medication And Food Supplements

Your vet may prescribe medicines and food supplements for your pet to recover well. Some policies may cover prescription medication for inflammation, infection, or pain relief. They may also cover food supplements needed for your pet to recover or for certain chronic conditions.

What Is Not Covered?

Every policy may have different coverage. It is wise to understand what it covers and what it does not before signing the contract. Standard plans cover illnesses and accidents, with some exclusions. 

Most companies do not cover the following:

  • Pre-existing or hereditary conditions
  • Behavioral issues
  • Dental issues. Some policies may cover dental work due to an accident.
  • Preventative care and routine checkups
  • Grooming
  • Hip Dysplasia 

Some insurance providers may cover pre-existing conditions if they are curable. It is best to choose an insurance agency that provides maximum coverage at a reasonable cost.

What Are The Main Types?

There are three main types of Pet Insurance. They are: 

Type 1: Lifetime Cover Pet Insurance

The most comprehensive Pet Insurance available right now is the Lifetime cover. The insurance continues to pay for ongoing issues with your life throughout their lifetime.

Lifetime cover is available in 2 types:

  • Annual lifetime cover
  • Per condition per year cover

Let us explain.

Annual lifetime cover, as the name suggests, will cover all health issues that your pet may experience in a year. However, for a per condition per year cover, you may get a specific amount for each condition that your pet experiences.

Your per condition per year cover may pay out $1,000 for diabetes, and another $500 for skin infections. If you exceed the limit, you will need to pay it on your own. In an annual lifetime cover, you may get $5,000 for all conditions that your pet may experience in that year. 

Type 2: Non-Lifetime Cover Pet Insurance

The non-lifetime cover is not all-inclusive and may exclude some conditions after you hit the claims limit.

There are two types of non-lifetime cover:

  • Per condition cover
  • Time-limit per condition cover

The per condition cover pays a specific amount for each condition and stops paying for these conditions once you reach the limit. Say your per condition cover pays $800 for eye infections. You will no longer receive payouts for eye infections of your pet if you cross the $800 limit.

The time-limit per condition cover has a time-limit condition along with a per condition limit. Say, the time limit is 12 months. Even if you do not cross the condition limit during this time, it will still be excluded after the time limit is over.

Type 3: Accident Only Pet Insurance

It is the cheapest Pet Insurance available in the market. It pays a fixed amount for any injuries that your pet sustains during an accident.

Cat Playing In The Grass

What Are The Main Factors That Can Affect The Price?

Your insurance costs largely depend on how inclusive you want your coverage to be. The more coverage you have, the higher will be the insurance costs. 

Other factors that determine the cost of your insurance premiums are:

  • Species: Getting a Pet Insurance for a dog is more expensive than a cat. You pay the highest premiums for male dogs and the lowest for female cats.
  • Breed: It is more expensive to insure a larger pet. Larger breeds tend to have more health issues and shorter life spans. Also, certain breeds tend to have more health problems than others. These breeds are costlier to insure.
  • Age: You can save on your insurance premiums if you insure your pets when they are young. Younger pets tend to have lesser health issues, which help cut down insurance costs.
  • Location: Your insurance premium also depends on where you live. If you live in a densely populated area, the insurance premiums, typically, are on the higher side. For example, Pet Insurance premiums are higher in California than in Tennessee because of high vet fees.

Can You Get Pet Insurance If Your Pet Is Already Sick?

If your pet already has a pre-existing condition, it may not always be possible to get Pet Insurance. A pre-existing condition is an illness that has been detected in your dog or cat before getting the policy. Pet insurers consider pets with pre-existing conditions as high risk. 

However, if your pet suffers from a “curable” pre-existing condition, you may still be able to find Pet Insurance for your pet. However, you will need to pass the waiting period before you can file a claim.

Can Older Pets Be Insured?

Yes, you can insure older pets. However, not all Pet Insurers cover pets that are beyond a certain age.

Older pets tend to have more health issues, some of which may require treatment or hospitalization. Hence, Pet Insurance that caters to older pets tends to have higher premiums. Some insurance companies will also raise the cost of the premiums as your pet gets older. 

Dogs and cats that are more than eight years old are considered “older pets.” For rabbits, this time is five years, and for horses, it is 20 years.

What Are The Alternatives?

If you are somehow not able to get Pet Insurance, you may consider some alternatives to protect your pet. 

The alternatives to Pet Insurance are:

1. Self-Funding

If you do not have Pet Insurance, you can always pay your vet bills from your savings. When self-funding, it is important to have enough funds set aside for the medical treatment of your pets. Think about the worst-case scenario and save according to that.

2. Credit Financing

There are some pet credit cards, like Care Credit, that lets you spread out your vet costs over a period of time. You can then get it approved before your pet needs a medical procedure. Unlike Pet Insurance, you will need to foot the entire bill.

3. Create A Pet Savings Account

It is the pet equivalent of a standard savings account. Many banks offer pet savings accounts that you can use to save up money for your pet. Generally, the transfer rates are between $5 and $50, with competitive interest rates to help accrue your savings. A pet savings account is a good alternative to Pet Insurance if you think you can save enough for when your pet needs it.

4. Financial Assistance Programs

If you have no Pet Insurance and no savings, you can approach certain national organizations for a grant or loan. Many states operate vet clinics run by volunteers that provide medical treatment at affordable prices. You can apply for a financial assistance program if you can’t afford the medical expenses of your pet.

Cat And Dog Looking At One Another


Is It Compulsory?

No, Pet Insurance is not compulsory. However, it is like a safety net to protect you from unexpected medical expenses if your pet falls sick or injures itself.

Can I Self Insure My Pet?

Yes, you may. However, to self-insure your pet, you must be disciplined and plan ahead. You must be realistic in how much you can save every month to pay for any medical exigencies of your pet. If your pet suffers from a chronic condition, you may need to spend several thousands of dollars. When self-insuring, you must think of all such situations. It makes more sense to self-insure if you have multiple pets, as buying an individual policy for each one may not be very cost-effective.

Does My Pet Need To Be Microchipped?

Microchipping your pet is largely voluntary in the USA. However, animals who have been identified as dangerous may need to be legally microchipped.

Can Pedigrees Be Insured?

Yes, you can insure your pedigree pets. However, pedigree pets tend to attract a higher insurance premium as compared to crossbreeds. Pedigree pets are of higher value and hence considered a greater risk by Pet Insurance companies.

Is It Worth Having?

Yes. A Pet Insurance plan can help you save thousands of dollars in the case of a medical emergency of your pet. However, buying Pet Insurance is both an economic and emotional decision that you need to make. You have to analyze your financial situation as well as your love for your pet before making the decision. Pet Insurance is worth it because it gives you the peace of mind that you would be able to care for your pet when it needs it the most. 

What Are The Benefits?

The benefits of pet insurance are:

  • It allows pet owners to save money when their pet is ill or injured
  • It prevents the pet owner from making the difficult decision of choosing between their financial stability and their pet’s life
  • Significant saving on medical procedures like Xrays and MRIs
  • More treatment options available for your pet

When Is It Recommended To Get Pet Insurance?

The best time to get Pet Insurance for your pet is when it is young. You save on insurance premiums and yet, have the peace of mind of being able to take care of your beloved pet. 


A pet is like a family member, and you will go all out to care and protect your pet. Routine care may be manageable. However, medical exigencies can cause tremendous emotional stress as well as financial. To help you overcome the financial stress, Pet Insurance is important. You can ensure proper care for your beloved at a minimal cost per month. If health insurance makes sense for your family, then why not Pet Insurance for your furry companion?

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