Factors to Consider When Choosing Pet Insurance

By Jody McMaster · May 31, 2023 · 8 minute read

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Factors to Consider When Choosing Pet Insurance

Pet ownership comes with an array of costs, and medical care can be one of the big ones. Does that mean you should get health insurance for your pet? Is pet insurance worth the cost?

Insurance policies for pets are more worthwhile for some pet parents than others. A policy that covers general pet wellness and preventive care may not make economic sense, but a policy that covers accidents and illness may be a good move for pet owners who would have trouble covering a hefty vet bill should their pet suddenly be injured or become sick.

But plans vary significantly on what they cover — and what they cost. Here are some key facts to consider when shopping for a pet insurance plan.

Average Cost of Pet Healthcare and Emergencies

Between food, daily care, equipment, and toys, the cost of owning a pet can be high. The cost of veterinary care can also stack up pretty fast.

Pet healthcare costs vary widely, depending on the region and what kinds of care your pet may need. But dog owners spend an average of $362 per year on routine vet visits, while cat owners shell out an annual average of $321 on routine care, according to the American Veterinary Medical Association.

Heartworm tests can tack on another $35 to $75 annually, with monthly preventive medications costing from $6 to $18 apiece. This means an annual cost that can range between $107 and $291 for heartworm prevention, while flea and tick prevention can cost from $55 to $215 per year.

Even a healthy pet may need emergency care, ranging from a few hundred dollars to thousands. Wound treatment and repair, for example, can run as high as $2,500 for a dog. Emergency surgery for a large dog can cost up to $5,000.

In fact, emergency room bills for pets can run as high as $10,000 when adding in hospitalization costs.

Recommended: Dog-Friendly Vacation Ideas

What Is Pet Insurance?

Once a niche product, pet insurance policies have been steadily gaining in popularity. Indeed, many employers now offer pet plans as part of their benefit packages. But what exactly is pet insurance — and how does it work?

Like health insurance for people, pet insurance is intended to ease some of the costs of keeping your pet healthy. You can choose from different levels of coverage, with each plan costing a monthly or annual premium based on how much coverage you choose.

Some plans cover accidents and injuries, some only cover accidents, and others include wellness and preventive care. The more comprehensive the coverage, the higher you can expect the cost to be.

As with health insurance for people, pet policies include exclusions, various levels of coverage, copays, deductibles (a certain amount you must pay out of pocket before coverage kicks in), and payment limits.

Most pet insurance policies exclude preexisting conditions and hereditary or congenital conditions. Some carriers will not accept pets younger than 8 weeks or older than 12 years, and many policies have waiting periods before benefits for injury, illness, and orthopedic care begin.

Pet insurance typically uses a reimbursement model: You pay the full amount due when you take your pet in for care, then submit a claim to the insurance company.

What Pet Insurance Covers

Pet health insurance offers several types of coverage, each with its own list of coverage options and costs. The three most common types of coverage are:

•   Accident and illness. This typically covers treatments and tests for accidents and illnesses.

•   Accident-only. This coverage generally takes care of accidental injuries, such as poisoning or ingestion of a foreign object, being hit by a car, cuts, and other physical injuries. Accident-only coverage is often preferred by owners of older pets that have aged out of comprehensive coverage.

•   Wellness plans. Wellness plans tend to cover preventive-care visits, such as checkups and routine vaccinations, and you can buy one as a stand-alone policy or as an add-on to an accident and illness policy.

Before deciding whether you want to buy a pet insurance policy, it’s a good idea to download sample policies from insurers. You can then review each policy for limitations, exceptions, and copayments. You can also reach out to a rep with questions.

What Pet Insurance Doesn’t Cover

Some pet insurance options have breed-specific exclusions, or it could cost extra to cover specific breeds.

As mentioned, just about every pet insurance policy excludes coverage of preexisting conditions.

Many plans also limit the amount you can claim, either annually or over your pet’s lifetime.

Wellness plans likely will not cover any treatments having to do with accidents, common injuries, or any other emergency treatments.

Accident-only plans will likely not cover any cost associated with illness, while accident and illness plans will likely not cover any preventive care or any care related to preexisting conditions.

An accident and illness plan with a wellness add-on provides the most comprehensive coverage. But again, it will likely not cover any care for a preexisting condition and could come with breed restrictions. That’s why it’s essential to read the fine print of every policy option before deciding which one is right for each pet.

How Much Pet Insurance Costs

The cost of pet coverage varies widely, but the average accident and illness premiums cost $640 a year for a dog and $387 for a cat, according to the North American Pet Health Insurance Association’s latest figures.

Accident-only premiums — covering things like ingestion of a foreign body, lacerations, motor vehicle accident, ligament tears, and poisoning — average $200 for a dog and $122 for a cat, the association reported.

In an Insurance.com survey of 800 pet owners who have pet insurance, 48% said the policies had saved them money. So, about half said the insurance was money-saving and half said it was not.

Costs can rise, depending on a number of factors:

•   Your pet’s breed (purebreds may cost more to insure because they are more susceptible to some hereditary conditions)

•   Age (plans tend to cost more as your pet ages)

•   Region (the higher cost of vet care in some areas is factored into your premium)

•   The coverage you choose

Keep in mind that once a pet reaches a few years old, most pet insurance providers will increase rates every year at renewal time.

Pros and Cons of Pet Insurance

Pet insurance can make pet treatments and services more affordable: As you make annual or monthly premiums, the insurance company bears the brunt of covered expenses.

Pet insurance also may help protect the emergency funds in a checking and savings account or savings account. If your pet is young or healthy, or you choose a lower tier, you can get accident and illness coverage for a fairly low cost.

But it’s important to read the details. Many plans limit the amount you can claim, either annually or over your pet’s lifetime. If your pet suffers a major medical problem, you could quickly max out your plan’s limit and find yourself paying the difference.

Depending on the cost of the premium, wellness-only plans and wellness add-ons may not be worth the price, since they can end up costing about the same as, or more than, paying out of pocket for routine care.

If pet insurance may be a possibility for your household, here are issues to consider before making a decision.

Research Which Pets Are Covered — and for What

Plans have different enrollment requirements. Typically, though, once a pet is enrolled in a plan, lifetime coverage is available — at least for as long as premiums are kept up. It’s a good idea to check to see if a plan requires a vet visit before enrollment.

Once plans have been identified that would likely accept your pet’s enrollment, find out what each of the policies covers. For plans that go beyond accident coverage, find out specifically what the benefits include. Will the policy, for example, cover ongoing treatment for a condition, or would a policyholder need to pay an add-on fee for continual care?

Investigate the Reliability of Pet Insurance Plans

Once a list of providers has been narrowed down to ones that would accept your pets, it’s a good idea to check the companies’ track records.

This includes the length of time they’ve been in business and how many policies they have in effect.

You may want to see which ones are rated by the Better Business Bureau and what those ratings are, and read online reviews. Who develops their policies? Are there veterinarians involved?

Compare Deductibles and Payout Limits

Pet policies come with deductibles. Sometimes it’s an annual deductible. Other times, it can be applied per illness or injury.

If that’s the case, then once a deductible is met for that condition, maximum reimbursements may be paid out for that particular injury or illness. If, though, a pet develops multiple conditions, a deductible would need to be met for each one individually.

If the deductible is applied per incident, monthly premiums may be lower. A low annual deductible may sound appealing but will have a higher premium than plans with a higher deductible.

Alternatives to Pet Insurance

Again, like humans, unexpected expenses can come up from time to time with a pet.

Another way a pet owner can pay for both expected and unexpected vet bills is to have an emergency fund earmarked for your pet. Stashing a little bit of cash each month into a pet care fund can slowly add up.

Whether you do or don’t spring for pet insurance, you may be able to avoid emergency care by monitoring your pet’s diet and exercise and staying up to date on vaccines and heartworm prevention treatments.

Even knowing the most common ailment associated with your pet can help keep a minor problem from turning into something major.

Finally, you may want to shop around for the lowest price on the veterinary services you need.

The Takeaway

Is pet insurance worth the cost? Pet insurance that covers accidents and illness may be a reasonable hedge against a huge vet bill. The payoff for wellness coverage is less clear. If you do decide to take out pet insurance, be aware of all of the policy’s limits and exclusions.

Life is full of unexpected events. Insurance is meant to ease the burden of paying the full cost of an accident, illness, or loss.

While SoFi can’t cover your pet, we can insure just about everything else. We’ve teamed up with some of the industry’s best insurance companies to bring you fast and reliable insurance coverage.

Learn more about reliable insurance options with SoFi Protect.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.


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