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Pet insurance: Everything you need to know

Many people consider their pets as part of their family. And that can mean wanting to make sure their pet’s medical needs are within reach by buying pet insurance.

Pet insurance is a medical policy that reimburses you in certain cases if your pet gets sick or hurt. Typically, these are for surprise situations like needing to treat cancer or a broken bone.

“Like renters insurance, pet insurance is something you purchase and hope you won't have to use, but if/when you do need it, you’ll be glad you’re covered since many vet bills can cost thousands of dollars,” said Edwin Plotts, head of growth at independent pet insurance marketplace, Pawlicy Advisor.

(Photo: Getty)
(Photo: Getty) (Ling Jin via Getty Images)

If you decide to buy pet insurance, it’s important to know exactly what the insurance does and doesn't cover. You should also ask your vet about any health issues that your type or breed of pet is likely to encounter down the road.

How does pet insurance work?

Because pet insurance companies don’t cover pre-existing conditions, most insurers require a checkup for your pet and then have a waiting period before they will approve a policy. That way, they can make sure your pet isn’t already sick. The accident waiting period is often only a couple of days, but you might have to wait a week or more for illness coverage.

Unlike human medical insurance, you have to pay your pet’s costs upfront and then file a claim with the insurer to be reimbursed. Because of that, “pet insurance will work at any vet clinic or animal hospital because it reimburses you, not the doctor,” Plotts said.

Three main factors determine how much your insurance pays out after you file a claim: the policy’s deductible, reimbursement level, and annual limit.

(Photo: Getty)
(Photo: Getty) (undefined undefined via Getty Images)

Deductible: This is how much you have to pay before your insurance coverage kicks in. Typically the higher your deductible, the lower your monthly premium.

Reimbursement: The percentage of a cost that the insurance company will cover. Most pet insurance policies have a reimbursement range between 60% and 100%. Usually the higher your reimbursement level, the higher your monthly premium.

Annual limits: Some insurers cap the amount they will pay out to you per year or per incident. You’re then responsible for any costs above that limit until the policy resets.

To make sure your pet insurance policy is as useful as possible, carefully check which conditions it covers and any limits on how much it pays out.

How much does pet insurance cost?

Similar to medical insurance for humans, pet insurance is a monthly premium you pay for your insurance policy. The average monthly pet insurance premium is $48.78 for dogs and $29.16 for cats for both accident and illness coverage, according to the North American Pet Health Insurance Association. (You can also buy coverage for just about any pet imaginable).

The cost of your insurance premium will depend on your pet’s age, breed, and where you live, Plotts said.

(Photo: Getty)
(Photo: Getty) (Eva Blanco via Getty Images)

“Coverage for a Chihuahua puppy in Des Moines, Iowa could be as low as $14, but in New York City the minimum is around $28 for the same pup,” he said.

Insurance premiums for smaller dogs and younger pets are usually cheaper because they tend to have fewer health problems.

What’s covered and what’s not?

It’s important to know that “no pet insurance covers pre-existing conditions so you want to enroll before conditions or issues arise,” Plotts said. That means if your cat develops leukemia, you won’t be able to buy a policy after the fact.

Pet insurance is usually not meant to pay for preventive health care unless you specifically buy a wellness plan add-on. That means that most pet policies don’t cover:

  • Routine checkups

  • Spaying and neutering

  • Heartworm medication

  • Vaccinations

  • Teeth cleaning

  • Grooming

  • Pre-existing or hereditary conditions

(Photo: Getty)
(Photo: Getty) (Marko Geber via Getty Images)

Instead, pet insurance is meant for more unexpected conditions. The two main types of pet insurance policies are illness and accident coverage. Most people buy both, Plotts said.

Illness insurance covers issues like:

  • Cancer

  • Arthritis

  • Ear infections

  • Urinary tract infections

  • Digestive problems

Accident insurances covers injuries like:

  • Bites

  • Poisoning

  • Broken bones

  • Swallowed objects

Some insurance policies won’t cover hereditary or congenital conditions like hip dysplasia or heart conditions unless you buy that coverage as an add-on. Make sure to check if your policy covers those conditions before you buy it.

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