Is Pet Insurance Worth It? How to Decide

A policy to cover your pet’s health can be a valuable defense against unexpected vet bills. Premiums and cost-sharing vary, so it’s important to understand what a policy covers and how it fits into your budget.

Here's what you need to know about pet insurance, including how it works and whether it might be a good investment for you. 

How pet insurance works

Like health insurance for humans, pet insurance helps with the cost of treating unexpected injuries or illnesses. But it works differently than your own health coverage.

On the plus side, there are no networks to consider or limitations on where you can take your pet. Any licensed veterinarian can treat your furry family member. However, with most pet insurance companies, you may need to pay the vet treatment costs up front and submit them to your pet insurance company for reimbursement of the eligible expenses.

Coverage comes in three types: 

• Accident and illness plans: The most common plan that covers emergency vet care, including diagnosing and treating injuries such as broken limbs or conditions like cancer, ear infections and allergic reactions.
• Accident-only plans: These less-common plans are typically a lower-cost option that only cover accidental injuries, such as those from ingesting foreign objects or colliding with a car and causing injuries. 
• Wellness plans: Usually available as an add-on to other pet insurance plans, these plans help offset the costs of routine or preventive care. Wellness pet insurance often covers vaccines, spaying, neutering, microchipping or heartworm preventives.

When you purchase a policy, you'll have to choose the following:

• Plan limit: While some companies limit the amount they’ll pay for a particular condition, an annual limit is more common. Limits vary by insurer, but you can usually choose a limit between $2,500 and unlimited. The higher the limit, the more expensive your premiums.
• Deductible: The deductible is the amount you must pay – usually annually – before your insurance helps with the cost. Deductibles typically range between $250 and $1,000. A higher deductible will give you a lower premium, but it also means you’ll pay more out of pocket if your pet needs care.
• Reimbursement percentage: Insurers will reimburse you for a portion of your pet's care after the deductible has been met. Reimbursement rates typically range between 60% and 90%, with 80% being most common.

For example, let’s say your dog develops bloat, a potentially deadly condition, and requires emergency surgery – and it’s the first medical expense for your pet in the past 12 months. It costs $3,000 for the surgery, but you have a pet insurance policy with a $500 deductible and 80% reimbursement percentage. 

Your pet insurer would reimburse you $2,000 (80% of the $2,500 remaining after you pay the first $500, which is your deductible). So you’d be out of pocket for $1,000 – the $500 deductible, plus your 20% ($500) share of the cost after the deductible is paid.

Pros and cons of pet insurance

Carefully weigh the pros and cons of pet insurance: 

Pros

• Less stress during an emergency: When your pet is ill or hurt, the last thing you need is undue stress over money. Pet insurance offers a safeguard so you can focus more on your pet, and less on your bank account.
• Financial relief: Emergency veterinary care, from surgery to cancer treatment, can cost thousands of dollars. By reimbursing you for a portion of the bills, pet insurance provides financial relief and reduces the odds you may have to forgo treating your companion because you can’t afford the full cost.
• More treatment options: With pet insurance, you can more easily take advantage of newer, pricier treatment options, without having to worry so much about their cost.

Cons

• The premiums add up: The North American Pet Health Insurance Association reported that the average monthly premium was about $62 for dogs and $32 for cats. For older pets, the cost can be much higher, as it can be from the start for certain breeds prone to expensive problems such as hip dysplasia. Over a pet’s lifetime, you could potentially spend $5,000 or more on insurance premiums. These costs may still be worthwhile for owners who want protection from unexpected, high vet bills. 
• Pre-existing issues aren't covered: Pet insurance won't cover conditions your pet had prior to enrollment or that developed during the policy's waiting period. For example, if your pet develops arthritis before acquiring pet insurance, any treatments for the condition down the line likely won't be covered.
• Exclusions apply: Coverage exclusions can vary by provider, but many policies don’t cover vet exam fees, dental disease treatment, certain age-related conditions (for example, hip dysplasia in pets enrolled after age 6) or alternative and experimental therapies. These details vary by plan, so reviewing what’s included is important.

What to consider before buying pet insurance

The value of pet insurance depends on your pet’s health needs and how often you use the coverage. You’re most likely to recoup the cost of a policy only in the event that your dog or cat requires extensive care. That is, they develop either a serious condition that requires expensive ongoing care, such as cancer, or have a catastrophic accident requiring extensive surgery, such as after being struck by a car. 

Keep in mind, too, that insurance won’t reimburse the full cost of such care. The vet bills for serious medical events often run up to five figures, and you’ll need to be able to cover 20%, or whatever other percentage your policy requires, of the treatment cost. That shared portion can still be substantial for major procedures.

For some pet owners, though, the reassurance pet insurance can provide against such a possible accident may justify a policy. Many owners value the predictability and peace of mind that come with having coverage in place.

A pet policy is best purchased when your pet is young and healthy, even if it’s less likely you’ll need to use the coverage for a while. The younger the animal, the less likely they are to have already developed health problems, so future claims may be more likely to be approved.

Older pets tend to be harder and much more expensive to insure, and the insurer may exclude more conditions. If you have a senior pet or a pet with significant health issues, insurance may be prohibitively expensive. Premiums are typically higher for senior pets, so comparing plans and understanding what’s covered at that age is especially important. Some pet owners may also prefer not to subject an animal with limited life expectancy to the discomforts of, say, chemotherapy or a series of surgeries.