Health insurance is an important part of every family member’s well being. Your pets are no exception to this rule. If you are a first-time pet owner you might look at it as an optional item in your annual budget but in all honesty, it is not. Having pet insurance makes it easier for pet parents to reduce the overall cost of vet bills when there is a health emergency.
For those who want the basics of “what is pet insurance,” here is a little guide to help you get started.
How Pet Insurance Works
While pet insurance policies can be compared to health insurance for humans, there are a few things to keep in mind. This type of insurance policy will cover your veterinary expenses in part or in its entirety.
It really depends on your insurer and the type of policy you choose. That is why you need to examine a whole lot of policies before you pick the one that is right for your little animal.
But there is a standard that defines the range of most policies. Like human health insurance, there is a deductible that kicks in before the coverage of the policy even begins. This is an out-of-pocket expense.
There is also a premium which is decided by the insurer based on the average costs of vet care in your region. And not all procedures are covered under every policy. Insurance companies look at pets as property. But there are plenty of advantages to getting health insurance for your pets.
For instance, if you go to a licensed vet, most insurers will offer coverage to your pet, unlike human insurance, which is often limited to a network of doctors.
Almost all insurers offer a range of policies that are easy to choose from. Typically, you will have three options—accident only, accident and illness, and wellness coverage. The first one is a basic policy, the second is fairly comprehensive and the third one is for preventative procedures.
The actual premium of the insurance depends on the type of policy you get but most of them range from $20-25 in per month. If you get a basic accident-only policy, it is likely to be about $11 for cats and $16 for dogs per month. The comprehensive policies are about $29 for cats and $49 for dogs every.
There will also be a few variables depending on your location, the age and breed of your pet and the add-ons (if any) on the policy. The payments start with a deductible and monthly or yearly premiums.
Now let’s look at the terminology.
What Does “Deductible”, “Reimbursement Rate”, And “Limits” Mean?
When you ask the question, what is pet insurance, you mean to know how much you’ll be paying. Let’s start with the first line of fire which is the deductible. This is a part of the vet bill that you will be paying before your coverage even begins.
You can choose the amount and also whether to pay it in installments over time or to pay it off at a time. The important thing to remember is that if your deductible is low, your premium is likely to be high and vice versa.
- Annual: If you go for an annual deductible, you will have to make the payments only once during the term of your policy. And once the term ends, the deductible amount will reset. This is a predictable expense because you know how much room you have in your budget.
- Per-Incident/Condition: Then there is the second type which is called the per-incident or per-condition deductible. This is a payment for each time you go to a vet with a new condition.
This is a bit of an unpredictable expense because it is hard to guess what can go wrong at any given point in time. But it might just give you a little more legroom if your pet is likely to have a variety of health problems.
Then there is the second term which is the reimbursement rate. This is the amount that the insurer pays you or the vet for the expenses incurred. This is usually calculated in percentage and ranges from 60-100 percent and it depends on the policy of your choice.
The plans in the 80-90 percent bracket are usually the most popular ones. But remember that your policy gets more expensive as the percentage of reimbursement increases.
This is how it works. When you visit the vet, you get a bill from the clinic. This should be submitted to the insurer as a claim. They will review it against your policy and once it is approved, you will get a check or the money will be transferred to your bank account. It takes about a week for this to happen.
Finally, there is the term ‘limit’. Typically, pet insurance policies have two types of limits—annual and lifetime. Here’s how they work.
- Annual: If your policy comes with an annual limit, it means that your vet expenses will be covered for several medical conditions within the limits of your policy but there is a yearly limit on each condition.
So, if there is a $5,000 limit on one condition, you can go to the vet any number of times but once you cross that expense limit, you will have to pay out of your own pocket regardless of the rest of the policy clauses.
At the end of the year, this limit will be reset. So, in year two, you are once again covered for $5,000 for the same condition.
- Lifetime: If the policy has a lifetime limit, your pet will be covered for a certain amount for one condition. But once you use it all up, there will be no reset. That is the amount of cover you get for as long as you stay with that policy.
While we’re asking “what is pet insurance” in terms of what’s paid for, let’s also look at the other side. Not everything is covered under pet health insurance. And unfortunately, that can sound like a whole list.
That’s why you need to sit with an expert and clarify what is covered and what isn’t under the policy you are planning to get. But if you are doing preliminary research on pet insurance, this is what you need to know.
Exclusions are often specific to conditions vis-a-vis the age and breed of a particular pet. And no matter the company you choose, it is not hard to find a list of conditions they don’t pay for. But going in, this is what you can expect to pay for out of your pocket.
- Pre-Existing Conditions: This is a term you will see a lot. Some insurers have their own definition of this term so it is better to clarify with them. But mostly, it means that any condition that your pet has before you take out the policy is considered pre-existing.
That is why it is often recommended that you get pet insurance while your little guy is still, well, little (meaning young). This is one of the most common exclusions.
- Waiting Period: This is the time between the day you took out the policy to the day the coverage kicks in. It can be anywhere between 10 and 30 days. Any conditions that pop up in this time period are also exempt from coverage. Although some insurers make an exception with specific policies.
- Pregnancy or Birth: This is another common exclusion. Your insurer will not pay for pregnancy costs or what follows. Some insurers offer partial coverage if there are complications in the meantime but mostly you are on your own for this one.
- Death or Theft: If your pet dies or is stolen, insurance companies typically do not offer coverage. And, even for this, some companies make an exception. This is usually the case if they are from organizations that are against animal cruelty (although the two are not linked) or offer coverage for exotic pets. But don’t go expecting it.
- Breed Exclusion: It is more expensive to offer coverage to dogs and cats of certain breeds. That is usually because those pets are more likely to have expensive medical conditions.
- Age Exclusion: Some insurers have a higher premium for very young or old pets while some others do not offer coverage at all. This also depends on the pet’s species and it is because they are likely to fall sick more than the ones within the prescribed age bracket.
Apart from this, there are also exclusions for preventable diseases. If you could’ve vaccinated your pet but you didn’t and now they have a condition, the insurance company will not pay for it. That’s on you.
This is also the case for certain elective procedures like ear cropping, declawing of cats and tail docking. Be sure to check the list before you get the policy. And by the way, spaying and neutering are also typically not covered.
The Bottom Line
You must also keep an eye on what the vet costs in your region are because that is a factor too. And remember that the biggest difference between human and pet health insurance is that after a visit to the vet, you will be paying the money upfront and the insurance company will reimburse you. So, be smart about the policy you pick. Or it’s money you will never see again.