New Pet Insurance Law in California: What You Need to Know
Senate Bill 1217, which took effect on January 1, mandates increased transparency from pet insurance companies operating in California. The law, signed by Governor Gavin Newsom last September, requires clearer disclosures about coverage, costs, and the distinction between standard insurance policies and pet wellness programs. The legislation’s goal is to protect pet owners and clarify the often-complex world of pet care insurance.
Californians show a keen interest in their pets, and the state has a higher rate of pet insurance compared to most other states in the U.S. According to 2023 data from the North American Pet Health Insurance Association (NAPHIA), approximately 18% of the 5.6 million insured pets in the U.S. lived in California. This figure represents a significant portion, given that less than 12% of the U.S. population resides in the state.
“NAPHIA worked collaboratively with the state of California’s department of insurance, legislators and bill sponsors to help enact pet insurance law that provides a stable marketplace for pet insurance providers, while also ensuring that legislation balances the needs of policy-holding pet parents, with those of new pet families who are looking to enroll their pets for coverage,” said Kristen Lynch, executive director of NAPHIA, in a statement.
Key Provisions of the New Law
The new law mandates that pet insurance companies clearly disclose specific details to consumers:
- Exclusions: Policies must plainly state any exclusions, such as pre-existing conditions or hereditary disorders.
- Waiting Periods, Deductibles, and Policy Limits: These aspects of the policy must be stated upfront.
- Changes Based on Pet’s Age, Claims, or Address: Insurers must inform policyholders of potential premium or coverage changes.
- Claim Payment Determination: Companies must explain how claim reimbursements are calculated.
- Required Veterinary Exams: If a veterinary exam is required before coverage, the costs and specifics of the exam must be disclosed. Exams cannot be required for renewals.
- Covered Diagnoses and Illnesses: Policies using a “benefits schedule” must detail the specific diagnoses and illnesses covered.
Pet Wellness Programs vs. Pet Insurance
A crucial aspect of the law addresses the distinction between pet insurance and “pet wellness programs.” These programs often cover routine preventive care, but they may not cover illnesses or injuries. The new law prohibits misrepresenting wellness programs as pet insurance and mandates clear disclosure that they are not, in fact, insurance products. Moreover, the law prevents insurers from requiring participation in a wellness program as a condition of purchasing pet insurance.
Jessica Roy Personal Finance Columnist
If you have questions about personal finance, you can email Jessica Roy at [email protected].
