How Does Dog Insurance Work?

No matter how careful you are with your dog, accidents happen — and sometimes they’re costly ones. Just ask Les Kaciban of Ashburn, Virginia, whose Komondor puppy Charlie swallowed a corn cob and required emergency surgery to remove it.

The bill came to a whopping $3,600. It was a good thing that Kaciban had pet health insurance. His out-of-pocket expenses came to an easier-to-swallow $1,000, while his insurance policy covered the difference.

Pet owners today face higher veterinary costs than ever. The American Pet Product Association, a trade organization based in Greenwich, Connecticut, reports that because technological advances in procedures for pets, like hip replacements, physical rehabilitation, and chemotherapy, have become more available, spending for veterinary services for dogs have exploded to an average of $407 per year for surgical procedures and $248 per year in routine wellness visits.

A pet health insurance policy can help defray those costs, explains Kristen Lynch, executive director of the North American Pet Health Insurance Association in Chagrin Falls, Ohio. This financial risk-management tool can make the difference between affording health care for your dog — and not.

Insurance Benefits and Drawbacks

Pet health insurance has its benefits, says Carol McConnell, DVM, vice president and chief veterinary officer at Veterinary Pet Insurance Co. in Brea, California. “It gives dog owners freedom,” she says. “It’s less restrictive for them. They don’t have to make a medical decision for their baby based on cost.”

Among its other benefits, notes Lynch:

• Pet insurance protects a dog’s family’s finances against unforeseen medical costs, offering them peace of mind knowing that they have resources should their pet become injured or ill;

• Pet insurance gives people the confidence to take their pet in for veterinary treatment without hesitating or waiting before a medical condition worsens;

• Pet insurance allows the veterinarian to provide pets with top-notch care and practice the most advanced medical treatments; and

• Pet insurance helps the dog live a longer, healthier life.

“Pet insurance is designed to be used,” Lynch says. “When people wait to take their dog in for medical care, it ends up costing more — especially with pets that are so good at hiding their illness.”

Of course, pet health insurance policies have their limitations, too. Depending on the type and its fine print, certain conditions may be excluded, such as pre-existing illnesses, anything related to pregnancy and/or birth, some routine treatments like parasite management and dental maintenance, and the purchase price of the dog if she passes away after a certain age.

At the time of underwriting, insurers may also look at factors like the dog’s age, whether she’s purebred or a mixed breed, and where she lives, Lynch says.

“And there are waiting periods, too,” she says. “Typically, there is a 48-hour wait for accident insurance, and a 14-day wait for policies that cover illnesses as it takes a longer time for illnesses to manifest.”

Demystifying Insurance

The pet health insurance process works similarly to human health insurance, says Emily Pointer, DVM, medical coordinator and staff internist at the ASPCA’s Bergh Memorial Animal Hospital in New York City. After choosing a plan that works best for their pet, policyholders pay a monthly premium and are responsible for co-pays and deductibles when they take their pets to the vet, she says.

“One important difference between pet and human health insurance is that even if the pet owner has insurance, she is usually responsible for paying the cost of veterinary care at the time of service,” Dr. Pointer says. “The pet owner then submits a claim for reimbursement.”

The process usually looks like this:

• Visit your vet (providers usually allow you to take your dog to any licensed vet).
• Pay your vet bill.
• Submit a claim to your insurance provider.
• Your provider looks into your receipt, visit details, and vet records and pays out the claim according to your policy.
• You receive reimbursement from your insurance company.

Sounds pretty straightforward, right? Well, selecting a plan is where it can get complicated.

A dozen different companies provide health insurance plans for pets, and each one has its own range of policies and premiums. When comparing them, first think about the type of coverage that fits your situation the best.

Coverage Options

In general, policies cover three distinct categories, says Lynch: accident, illness and wellness. Accidents include unexpected injuries, like Charlie’s corn cob meal that required emergency surgery; illnesses include diagnosis and treatment of medical conditions, like diabetes or urinary tract infections; and wellness (also termed routine or preventative care) includes vaccinations, laboratory work and dental work.

Insurers often combine the different types of coverage in their plans, Pointer says. “And then there is a price difference as well. The more a policy covers, the more expensive the premium,” she says.

Think of it like good-better-best policies, Lynch says.

Selecting Insurance Plan Variables

On top of that, many insurers allow you to customize some or all of your plan variables. For example, with SPOT Pet Insurance, you select the deductible, annual limit, and reimbursement rate. Other providers may have a pre-packaged recommendation or requirement for the variables within their plans. Pet parents can think about how much involvement they want to have in building their policy and let that help them narrow down which provider to use.

The deductible in dog insurance works the same way as in human health insurance: you’ll need to meet your deductible before you can be reimbursed. Once the deductible is met, you’ll be reimbursed up to the percent defined in your policy. A low deductible could be $100, and a high deductible could be $1,000. The options available for deductibles depend on the insurance provider.

For annual limits, insurers typically offer lower-end coverage of less than $2,000, mid-range coverage in the $2,000 to $3,000 range, higher-end coverage in the $3,000 to $5,000 range, and unlimited coverage, “which is like the Cadillac of pet health insurance,” she says. “Sixty to 80 percent of policyholders have mid-range coverage. That’s because if a pet has to stay overnight for treatment, for example, it can cost about $2,000 or $3,000.”

For reimbursement rates, dog owners can expect to get 70, 80, or 90 percent back on eligible claims. Again, some providers will have a set reimbursement amount while others allow you to choose your deductible when you set up your policy. Premiums vary depending on the deductible, annual limit, and reimbursement rate.

Something else to consider when choosing a policy: Whether the provider has a cap on particular conditions, like $500 for kidney disease or $1,000 for foreign body surgery; a set percentage that it will pay of the overall cost, such as 70 percent of the bill for a foreign body surgery; any per-incident maximums; or specific policies regarding coverage of chronic conditions, Pointer says.

“There may also be restrictions for hereditary or genetic conditions if you have a purebred dog,” she says. “So be sure to read the fine print of each policy.”

Become Pet Insurance Savvy

Deciding whether to invest in pet health insurance and can be a painstaking process. But with some careful research and reading of various policies’ fine print, you can choose the one that’s right for you and your dog.

“It is very important for pet owners to be well informed about this complicated subject before picking a policy,” Pointer says.

Cesar Millan is the chairman of SPOT Pet Insurance, and that’s who ensures his pack. They share his mission of creating healthier pets, better humans, and a better planet.

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