Why Pet Insurance

How Does It Work?

Learning about pet insurance can be difficult and often hard to understand. We want to make sure you know what you're getting.

Common Questions

How does pet insurance work?

Unlike human health insurance, the pet owner is usually required to pay the veterinary bill upfront and submit a claim to the pet insurance provider for reimbursement.

How do insurers compute reimbursement?

Many pet insurance providers find ways to limit their risks through reimbursement. Almost all providers require a coinsurance and most will reimburse 80% or 90% of the veterinary charges. How they choose to reimburse varies from provider to provider.

Some companies offer a benefit schedule that lays out in detail what a pet owner would get back for a given procedure (regardless of the actual cost). Most common among providers is to issue a ‘reasonable costs’ or ‘usual and customary fee’ reimbursement plan. This means that the insurance provider will determine costs that are reasonable for veterinarians to be charging in the pet owner's geographic location and reimburse up to that given amount. Few companies will reimburse the stated amount (usually 80-90%) based off of the pet owner’s actual bill.

When will premiums ever increase?

Almost all pet insurance providers will increase premiums with inflationary costs of veterinary medicine. Many companies will increase premiums based on the pet’s age, and some may even increase premiums as the pet owner files claims.

How do payout limits work?

Many insurance providers offer different plans that a lot various payout limits. Companies may place limits on a per incident basis where they would specify the maximum amount that they would pay out for one incident. They can also place limits on per illness category, per year, or over the lifetime of the pet.

What is usually covered in a pet insurance plan?

Pet insurance will cover veterinary costs that arise from a pet getting sick or injured. Items such as the veterinary exam, surgeries, medications, diagnostic tests are typically covered.

What is usually excluded in a pet insurance plan?

Almost all pet insurance companies in North America exclude pre-existing conditions. Other exclusions typically include hereditary and congenital disorders, preventative care, conditions relating to breeding, alternative veterinary treatment, most plans exclude coverage due do an accident or illness spawning from a natural disaster (such as hurricane or earthquake).

How do insurers handle chronic conditions?

Many companies will cover a chronic condition in the initial policy term that the condition first appeared in. Upon subsequent policy renewal the condition would become pre-existing and therefore not covered. Some insurers have add-ons that allow for the coverage of chronic conditions while others include chronic condition coverage in more comprehensive plans. These comprehensive plans typically cost significantly more than a lower plan.

Pet Insurance Terms

  • Hereditary condition - a disease or disorder that is inherited genetically. Certain breeds of dogs and cats are prone to specific conditions. Some companies will limit or exclude any conditions considered hereditary.

  • Congenital condition - physical anomaly which is recognizable at birth, and which is significant enough to be considered a problem. This is another common exclusion.
  • Pre-existing condition – An illness or recurrence of any illness or condition which first occurred or displayed signs and/or symptoms prior to pet’s policy inception date or an injury or recurrence of an injury that occurred prior to policy inception date.
  • Chronic or recurring condition – A disease or disorder that is long-lasting or recurrent. Recurrent conditions have lapses with periods of remission in between. An example among pets may be diabetes or seasonal allergies.
  • Deductible – The amount the insured must pay with respect to any loss, deducted from the total sum paid or payable for the loss under the terms of the policy.
  • Coinsurance – The insured’s portion of the cost of covered veterinary treatment. This is typically 0%-30% in the US.
  • Payout limits – Maximum dollar amount that an insurance company will pay in a given situation. They are used to decrease the exposure of large claims by insurance providers. A pet insurance provider may place limits on a per incident, per year, lifetime, or per illness category basis.

Still have questions or want to get specific? Feel free to contact us or see how we compare.