Imagine coming home to a distressed dog, vomiting and clearly unwell. A frantic trip to the veterinarian reveals a swallowed sock and an emergency surgery costing thousands of dollars. Could you handle that unexpected expense? If you’re unsure, pet insurance might be worth considering.
Pet insurance acts as a financial safety net, helping cover the high costs of veterinary care. Policies can reimburse you for a range of expenses, including cancer treatments, emergency care, prescription medications, and surgery. In dire situations, it could even be the difference between life and euthanasia if an owner cannot handle the financial burden of treatment.
However, if your pet remains relatively healthy, you might end up paying thousands in premiums without ever needing to file a significant claim. The critical question then becomes: is pet insurance a worthwhile investment? Let’s explore the factors to help you decide.
The Growing Popularity of Pet Insurance
More and more pet owners are opting to protect their companions with insurance. According to the North American Pet Health Insurance Association (NAPHIA), over 5.6 million cats and dogs in the United States were insured in 2023, a 17% increase from the previous year. The number of insured pets has more than doubled since 2019.
While this shows significant growth, the industry still only covers a small segment of the total pet population. The American Pet Products Association’s 2024 survey estimates roughly 58 million U.S. households own dogs, and 40 million own cats.
Understanding Pet Insurance Costs
According to 2023 NAPHIA data, the average annual cost for an accident and illness policy is approximately $676 for dogs and $383 for cats. This translates to about $56 per month for dogs and $32 per month for cats. Accident-only policies lower the annual cost to $204 (around $17 monthly) for dogs and $116 for cats (about $10 monthly). These plans cover issues like being hit by a car or accidental poisoning, but not illnesses.
Premiums are influenced by your pet’s breed and age, the cost of veterinary care where you live, and the specific policy chosen. Be aware that premiums increase as your pet gets older and becomes more susceptible to health problems. Canceling a policy because of rising costs could leave your pet without coverage precisely when it’s needed most.
To illustrate how rates can change, let’s look at Pets Best’s sample quotes for a medium-sized, mixed-breed dog in Katy, Texas. The following are sample monthly prices for a policy with a $5,000 annual limit, a $500 deductible, and an 80% reimbursement level:
- 3 months: $35.11
- 2 years: $31.50
- 4 years: $33.61
- 6 years: $48.34
- 8 years: $70.99
- 10 years: $114.10
- 12 years: $156.59
While the monthly increases might seem manageable, the average annual cost accumulates over the dog’s lifespan. Similar increases could occur in cat premiums. Remember, these numbers are estimates based on one pet insurance company in one ZIP code. Your costs will vary, so it’s always wise to shop around.
What Does Pet Insurance Cover?
Pet insurance can be a financial lifeline if your pet faces expensive medical bills. Most policies, however, will not reimburse every dollar spent at the vet.
Policies usually have an annual deductible, which is the amount you pay out-of-pocket before your insurance starts to cover your claims. Once you have met your deductible, most plans pay a certain percentage of your vet bill — typically 70%, 80%, or 90%. Plans may have annual maximum payouts.
Insurers use varying methods for applying the deductible and calculating the reimbursement percentage. Some deduct the deductible first, then pay a percentage of the remaining bill. Others apply the reimbursement rate before the deductible. This changes how much your pet receives to pay the claim.
Let’s use an example. Say you have a $500 deductible plan that pays up to $10,000 per year and reimburses 80% of your costs. If your dog needs $2,000 surgery and you haven’t used any of your deductible, your plan would pay either $1,100 or $1,200.
- Deductible first: $2,000 – $500 deductible = $1,500. 80% of $1,500 = $1,200.
- Reimbursement rate first: $2,000 x 0.8 = $1,600. $1,600 – $500 = $1,100.
Plans can be customized with different deductibles and reimbursement rates, but the premium adjusts accordingly.
Even with a plan that has no annual limit and 100% reimbursement, the coverage may not include every veterinary expense. Spay and neuter surgeries are typically not covered unless you have also purchased add-ons for wellness or preventative care. The same applies to vaccinations as well as annual checkups, and dental cleaning. Insurance is intended for unexpected costs, not routine expenses. Pre-existing conditions are an extremely important exclusion in the vast majority of all plans. Pet insurance generally covers only new injuries or illnesses, not conditions the animal had before the policy went into effect. Pre-existing conditions can also be a problem if you let your policy lapse; if you reinstate coverage, all previous ailments will count as pre-existing conditions, even those covered by the previous plan.
Veterinary Care Expenses: What’s Common?
According to recent APPA survey statistics, dog owners spend an average of $624 annually on surgical visits to the vet and $448 each year on sick visits. Cat owners tend to spend less, with average annual expenses of $251 on surgical visits and $198 on sick visits.
The most common types of pet insurance claims for dogs are:
- Dermatitis
- Gastroenteritis
- Ear infection
- Degenerative arthritis
- Trauma
- Dental disease
- Urinary tract infection
- Valvular heart disease
- Respiratory infection
- Liver disease.
The most common types of pet insurance claims for cats are:
- Gastroenteritis
- Urinary tract disease
- Kidney failure
- Dental disease
- Degenerative arthritis
- Hyperthyroidism
- Respiratory infection
- Diabetes
- Inflammatory bowel disease
- Atopic or allergic dermatitis.
Some of these conditions are minor, while others can involve substantial vet bills. For instance, trauma can range from animal bites to car accidents. Serious injuries from accidents could lead to costly surgery and hospitalization. If your pet has only minor health issues throughout their life, you may end up paying far more for insurance than you gain. But if your pet experiences a major medical problem, insurance could prove to be an excellent investment.
Alternatives to Pet Insurance
If pet insurance isn’t your preferred option, consider these alternatives:
- Self-funding: Set up a high-yield savings account specifically designated for veterinary expenses. The advantage is that if your pet remains healthy, the money is available for other uses. The downside is that you might not have enough savings if an unexpected emergency arises.
- Financial assistance: If you struggle to fund your pet’s care, explore options such as payment plans with your vet, affordable care clinics, or crowdfunding. Charitable organizations, such as the Humane Society of the United States, may also provide grants or other aid.
The Verdict: Is Pet Insurance Right for You?
Purchasing pet insurance may be a good idea if:
- Your pet is young and healthy.
- You do not have sufficient savings for a sizable veterinary bill.
- The peace of mind justifies the cost.
Pet insurance may not be worthwhile if:
- Your pet is older or has known health problems.
- A large veterinary bill wouldn’t cause a financial hardship.
- You’re willing to take the risk of a costly diagnosis rather than pay for insurance you might not need.
