Should I Get Pet Insurance? What It Is and How It Works

Should I get pet insurance? Your pet isn’t just an animal. In most cases, they are part of your family. You love them in every way possible, from belly scratches to the best pet food. Yet, a recent study by Empower found that 37% of Americans don’t have enough emergency savings to cover steep unexpected vet bills.

Veterinary care for your beloved pet can easily climb into the $1,000’s, and vets usually require payment at the time of service. What will you do if your pet has an accident or becomes ill? Are you prepared?

Let’s take a look at how pet insurance can relieve the financial stress of caring for your animal’s healthcare needs.

What is pet insurance?

Simply put, pet insurance is a policy that you purchase to cover your pet’s veterinary expenses, in much the same way that your health insurance policy provides coverage for your healthcare needs. In years past, most pet owners paid for veterinary costs out of pocket, often foregoing the best medical attention when finances were limited. Now, with growing options for insurance coverage, millions of pets are covered under policies that provide payment for medical care when it’s needed the most.

How does pet insurance work?

Before we dive into how policies work, it is essential to familiarize yourself with some key terms. Each of the best pet insurance companies provides options for factors such as deductibles, maximum payout limits, and exclusions. Understanding each of these terms ahead of time will help you decide which policy is best for you.

Pet Health Insurance Glossary of Terms
Premium	A premium is the monthly (or annual) cost of your pet insurance policy. You’ll pay this fee out of pocket whether you use the policy or not.
Direct Pay	Direct pay refers to payments made directly from the insurance company to the veterinarian. Policies that offer direct payment are less common than those that offer reimbursement but are ideal for pet parents who cannot pay upfront or do not qualify for credit.
Reimbursement	Most pet insurance policies offer reimbursement. This means that you pay the veterinarian directly, and then submit a request for reimbursement of the funds to you, based on your policy guidelines.
Deductible	You’ll choose a deductible amount when you purchase the policy. It is the amount you must pay out-of-pocket before your policy will begin paying or reimbursing for covered expenses in a given year. You must apply this amount to qualifying expenses to count towards your yearly total.
Claim	If you have a pet insurance policy and take your pet to receive care, you’ll be required to submit certain information to the pet insurance company for payment or reimbursement. Each incident that you submit is referred to as a claim.
Maximum Annual Coverage	The maximum annual coverage is the total amount that the pet insurance company will pay out for qualifying expenses within a policy year. In some instances, this amount is unlimited.
Reimbursement Percentage Rate	When purchasing your pet health insurance policy, you’ll choose a reimbursement percentage rate. This is the percentage of the total qualifying expenses that your pet insurance company will pay out or reimburse after deductibles are met.
Waiting Period	If your pet’s health plan is subject to a waiting period, qualifying expenses that occur before the end of the period will not be paid out or reimbursed. Waiting periods often vary within a policy based on expense type (accident, illness, cruciate ligament events)
Exclusions	Each pet insurance policy will contain a list of exclusions. These are events or expenses that the policy will not cover.
Pre-Existing Condition	Most pet insurance companies won’t cover pre-existing conditions. These are illnesses or injuries that occur or are present before the policy's waiting period ends.
Hereditary & Congenital Conditions	Hereditary or congenital conditions can occur as a result of breed standards or poor fetal development. Some pet insurance policies will not cover these conditions.
Alternative Therapy	Alternative therapies are treatments received outside of the veterinary field. These include acupuncture, massage, hydrotherapy, and more.

Now that you understand the terms, let’s look at how your pet insurance policy will work. We’ll assume that your pet has no pre-existing conditions, that you have purchased a pet insurance policy, and that the waiting period has passed.

If your pet has an unfortunate accident that leads to an injury, you’ll take them to the veterinarian to receive care. Let’s take a look at a sample policy and see how your coverage will work.

Sample Policy
Policy Type	Accident & Illness with Wellness Add-On
Premium	$45/Monthly
Payment type	Reimbursement
Deductible	$250
Reimbursement Percentage Rate	90%
Maximum Annual Coverage	$100,000
Exclusions	Pre-existing conditions, cosmetic procedures, breeding costs

Let’s assume that your pet has not seen the veterinarian yet during this policy year and now requires an extensive surgery to repair a badly broken bone. The surgery also requires an overnight hospitalization, several doses of pain medication, and a follow-up visit to monitor the pet’s progress and eventually remove the cast.

Each time you take your pet to the vet, you’ll pay the veterinarian directly according to their policy. You’ll then request a receipt of services and payment, which you’ll submit to your pet insurance company.

They’ll review your documentation and reimburse you based on your policy. Considering the sample policy above, if all of your pet’s expenses qualify, you can expect the following payments.

Sample Policy Payout
Visit #1 Emergency visit with surgery and one overnight stay in the pet hospital	Vet Cost: $2,500	Deductible: $250 Non-qualifying expenses $300 Pet insurance reimbursement to you: $1,755 (90% of qualifying expenses after deductible)
Visit #2 Follow up	Vet Cost: $200	Deductible: $0 Pet insurance reimbursement to you: $180 (90% of qualifying expenses)
Visit #3 Cast removal under sedation	Vet Cost: $450	Deductible: $0 Pet insurance reimbursement to you: $405 (90% of qualifying expenses)
Total Veterinary Fees	$3,150
Your Total Out-of-Pocket	$1,360
Total Pet Insurance Company Reimbursement	$2,340

As you can see from this example, having pet insurance available equates to significant savings. If you had previously met your deductible or had chosen a lower deductible option, the savings would have been even higher.

What's Covered?

Each pet insurance policy will outline what is and is not covered. This is based on what type of pet insurance policy you purchase, with some covering only accidents or illnesses, and others encompassing wellness and preventative care. Before making your purchase, review the policy documents carefully. Services and products that are often covered include:

Emergency veterinary care after an accident
Veterinary care during an illness
Diagnostics such as X-rays and bloodwork
Treatments such as surgeries and other procedures
Medications
Vaccinations
Vet visits

Many pet insurance policies also offer free telehealth visits for all policyholders and optional add-on coverage for dental care, alternative therapies, and end-of-life care.

What do providers exclude from pet insurance policies?

All insurance policies have exclusions, or services and products they will NOT cover. While these vary widely based on your policy, some exclusions are common amongst most policies. These include:

Pre-existing conditions
Conditions that certain breeds are prone to, such as hip dysplasia
Breeding and whelping care
Cosmetic procedures
Care related to abuse or neglect

Always review your policy’s exclusions before purchase to ensure the policy will provide for your pet’s needs.

Should I get pet insurance?

After reviewing the examples above, it’s clear that having pet insurance is financially beneficial. Pet parents with limited financial resources or who don’t qualify for credit plans can rest assured that their pet’s health needs are covered. However, there are some other factors to consider when deciding if you want to purchase a pet insurance policy.

The first thing to consider is your pet’s age and breed. Pet insurance is beneficial for all pets, regardless of these factors, but there are times in an animal’s life when they might require more vet care than others.

Is your pet’s breed prone to illness or injury?
Is your pet aging and requiring more frequent visits to receive care?
Do you have a puppy who is clumsy and at high risk of having an accident?

Answers to these questions will help you determine whether a policy will be beneficial for you.

Compare:

Pros of having pet insurance

As with most things in life, there are pros and cons to purchasing a pet insurance policy. Let’s review some of the pros.

Peace of mind that your pet’s care is covered
Helpful for those with poor credit or limited savings
Ongoing coverage for chronic conditions

Cons of having pet insurance

While highly beneficial, there are some cons to having pet insurance. These include:

Monthly premium costs
Deductibles and non-covered expenses are still paid out of pocket
Exclusions of certain care

How to choose the right policy

Choosing the right pet insurance policy starts with deciding which type of policy you need. Direct pay policies, such as those offered through Careplus by Chewy, are most convenient and ideal for pet parents who don’t have the means to pay out of pocket and wait for reimbursement.

Next, review the best pet insurance plans to find the right fit for your pet and budget. For a strong all-around option, MetLife Pet Insurance is our current top-rated provider, with no upper age limit, no breed restrictions, and a Family Plan designed for households with multiple pets. You can compare MetLife coverage and pricing to see whether it fits your needs. For highly customizable coverage or low deductible options, consider Lemonade or Spot, while Embrace may be worth a look for pets prone to hip dysplasia.

According to the North American Pet Health Insurance Association, over 7 million pets in North America are currently covered by a pet health insurance policy, a number that increases each year as more pet parents realize the affordability and benefits of pet insurance. Will your pet be next?

Related Article: Benefits of Bundling Home and Auto Insurance

About Author

Tammy McKinney

Tammy McKinney, RN, is a seasoned registered nurse and accomplished healthcare and personal finance writer. With a background in acute care, long-term care, and hospice & palliative care, Tammy combines her medical expertise with her passion for writing to educate and inform the public on various health and finance-related topics.