Is Pet Insurance Worth It?

Should I get pet insurance?

Is pet insurance worth it? Do I actually need it? - These are the questions of the hour.

Like most insurance, pet insurance is a great way to protect yourself against unexpected events and financial risk. However, choosing the wrong type of plan can make it expensive.

Whether you should get health insurance for your pet depends on a variety of factors, such as how much you have in savings to pay for vet bills and the likelihood of your pet needing care. To help you through this, we also created a handy guide to how to choose the best pet insurance.

That said, considering the benefits and drawbacks of pet insurance policies is a good place to begin when deciding if you should get pet insurance.

How does pet insurance work?

Although most pet insurance policies offer different types of coverage, most work through reimbursement.

In other words, you’ll pay the vet bills yourself and submit a claim to the insurer. Some policies, however, offer the convenience of paying the vet directly, where the insurer settles the bill directly with the vet. The time it takes to be reimbursed varies per provider, but you should expect it to take a few weeks.

In exchange for coverage, the insurance company charges you a fee called a monthly premium. Generally, you’re also responsible for paying a percentage of the cost of each visit, called a co-payment.

A deductible will also factor into your total pet insurance cost.

There are two main types of deductibles:

• Annual deductible: This is a set amount that you must pay each year before the policy kicks in to cover expenses.
• Per-incident or per-condition deductible: This is a set amount you must pay per incident before the policy covers expenses.

Generally, per-incident deductibles are less than annual deductibles, but they can become more expensive in the long run.

Example of how pet insurance works

Imagine your pet sees the vet three times in one year, racking up the following bills:

• Visit 1: ingesting a foreign object: $3,600
• Visit 2: eye infection: $350
• Visit 3: bladder infection: $400

If your policy has an annual deductible of $200 and a 20% co-pay, here’s what you would pay for each visit:

• Visit 1: $200 plus 20% of the remaining cost = $880
• Visit 2: 20% of the cost = $70
• Visit 3: 20% of the cost = $80
• Total cost for the year: $1,030

With a per-condition plan, you’d pay a deductible each time because your pet had three different issues. With a $100 deductible and a 20% co-pay, your costs would be:

• Visit 1: $100 plus 20% of the remaining costs = $800
• Visit 2: $100 plus 20% of the remaining costs = $150
• Visit 3: $100 plus 20% of the remaining costs = $160
• Total cost for the year: $1,110

What does pet insurance cover?

Depending on the type of policy you have in place, your pet insurance coverage will vary.

There are three types of coverage available:

• Accident and illness
• Accident-only
• Wellness

We’ll break down what each type covers below.

Accident and illness (A&I) coverage

This type of pet insurance covers vet bills for sickness and injuries.

With A&I coverage, you can get assistance paying for the cost of treatment. For example, if your dog swallows a foreign object or gets hit by a car, A&I coverage will assist with vet bills by covering the cost of treatment.

In addition, the pet health insurance will pay for illnesses, such as bladder and eye infections and major chronic health issues like allergies, cancer and diabetes. Most policies will also provide reimbursement for end-of-life care like euthanasia deemed medically necessary.

In our opinion this is the best type of insurance to have as it covers many unexpected event. However, if your pet’s breed is not prone to illness, then this may not be worth the expense for you. Instead, you may want to opt for accident coverage only.

Accident-only (AO) coverage

These pet insurance plans only pay for veterinary expenses related to accidental injuries.

Pet insurance companies will pay only for treatments resulting from accidental injuries, such as setting broken bones or treating pets when they ingest something toxic. Plans generally won’t pay for illnesses and chronic medical conditions.

Wellness coverage

Wellness plans cover routine care such as checkups, teeth cleanings and vaccinations.

As previously mentioned, most pet insurance doesn’t include wellness coverage, but many insurers offer wellness as an add-on to other coverage rather than as a standalone policy.

In our opinion, opting for wellness coverage is usually not worth the expense.

What does pet insurance not cover?

Exclusions are common features of pet insurance.

Insurers typically won’t provide you with reimbursement for the following:

• Pre-existing conditions
• Grooming services
• Nonprescription pet foods
• Experimental treatments
• Pregnancy care
• COVID-19
• Elective procedures, such as declawing and ear cropping
• Preventable diseases, such as kennel cough and parvovirus

This list above isn’t exhaustive and some exceptions may apply. It’s always important to check with your provider to ensure you have a clear understanding of what they cover and any exclusions.

Consider the cost of pet insurance

The average cost of a comprehensive pet insurance plan is $56 per month for dogs and $47 per month for cats. However, the final cost of pet insurance premiums depends on multiple factors.

Below are some of the most common factors that influence the cost of pet insurance:

• Breed: Breeds prone to medical issues cost more to insure, while mixed-breed dogs and cats cost less.
• Age: Because the risk for health problems increases with age, you’re likely to pay more for older dogs and cats.
• Location: In areas where the overall cost of living is high, monthly premiums tend to be more expensive.
• Type of policy: Because it’s more comprehensive, accident and illness insurance usually carries a higher price tag.
• Policy details: The monthly cost is generally lower for plans that have higher deductibles and lower reimbursement percentages because you pay for more of the expenses yourself.
• Number of pets: Multi-pet policies are typically more expensive than single-pet plans.

Refer to this table for average premiums for different types of pet insurance.

This data is based on statistics provided by the North American Pet Health Insurance Association (NAPHIA).

Understand the cost of treatment without pet insurance

The average cost of emergency veterinary care can be anywhere from $800 to $1,500 or more. Overall treatment costs will vary based on your pet’s condition and what kind of treatment is needed.

Here’s a breakdown of costs for common emergencies and illnesses.

This information is based on Pets Best claims data from January 2017 - May 2020.

Is pet insurance worth the cost?

While there are affordable pet insurance options available, it’s important to consider the value against the cost.

In the event of a major and unexpected accident or injury to your pet, those years you spent paying premiums may very well be worth it. However, when it comes to minor health issues, you may want to consider setting up an emergency fund and putting that monthly premium fee into it.

In the end, whether pet insurance is worth having is a personal choice that will be affected by your financial realities.

Let’s dig a little deeper and examine wellness coverage, accident-only coverage, and A&I coverage to see if they’re worth it.

Is wellness coverage worth it?

In most cases, we think wellness plans are not worth the expense.

Generally, the annual cost of wellness plans will be less than the total costs for all routine services. However, wellness plans can include many exclusions. Therefore, it’s important to review what is included to see if it’s actually worth the cost.

Most pets need to see the vet once per year for routine checkups and vaccinations. The average cost for a routine visit is $50 to $250 plus $60 to $100 for vaccinations, according to data from Pets Best.

You may also accrue additional wellness costs like $300 to $500 for dog teeth cleaning, a crucial part of dental insurance, and $80 to $200 for routine blood tests.

Is accident-only coverage worth it?

Accident coverage is definitely worth the expense.

Your pet may go its entire life without ever having an accident, so there’s a risk you may never use AO coverage. At the same time, average premiums of less than $20 per month may make coverage worth it simply for your peace of mind.

Is accident and illness coverage worth it?

A&I plans do cost more per month but they’ll pay for more things, increasing the likelihood you’ll use your policy. If your pet develops a chronic condition, you’ll likely find this type of pet insurance to be well worth the money.

It’s important to evaluate the likelihood of illness for your pet. If you have a breed prone to illnesses (like a pug), then this type of plan may be worth the expense.

Alternatives to pet insurance

Pet insurance isn’t the only way to cover medical costs for your furry friends.

Here are some alternatives to taking out a pet insurance policy:

Savings accounts

If your pet is too old for pet insurance, or has many excluded pre-existing conditions, pet insurance may not be an option for you.

Alternatively, some people don’t see the value in paying for pet insurance if their pet is healthy and never uses it. In all of these cases, a high-yield savings account may be a better fit. Depositing a small portion of each paycheck into a savings account gives you an emergency fund for visits while allowing you to earn interest.

Here is a look at our top recommended savings accounts for an emergency pet fund:

Credit card

According to data from the APPA, most vet bills in America are paid using a credit card. While a credit card may not be the right option for everyone, it does allow you to defer payments or pay bit by bit to cover high-ticket items.

Have a look at our picks of the best credit cards here.

Vet payment plans

If none of these options make sense for you, you may want to speak to your vet about financing options. Many vets offer payment plans, provided you pass a credit check and are willing to pay interest.