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Dr. Nnaji Umeh Licensed Insurance Producer - Pawlicy Advisor
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What is pet insurance?
Pet insurance is a type of insurance policy that can help pet owners pay for the cost of veterinary care if their pet becomes sick or injured. Also known as pet health insurance or pet medical insurance, these policies provide financial security and peace of mind by limiting pet owners' financial risk caused by unexpected vet bills.
Since 2018, the total number of insured pets in the United States has grown at an average rate of 22.5% year-over-year as more and more pet owners seek solutions to manage the rising cost of vet care.1 Prices in the veterinary service sector have outpaced inflation over the past decade, spiking by as much as 11.4% between June 2022 and June 2023, according to the Consumer Price Index.2
Pet insurance can provide valuable financial security for future visits to the emergency vet — which costs between $800 and $1,500 on average but can easily add up to $5,000 or more. Such an expensive and unexpected bill can present a significant financial burden for many pet parents, forcing them to question whether they can afford their pet's critical care.
While it's difficult to imagine your four-legged family member in such a scenario, the unfortunate reality is that one-in-three pets will need emergency medical treatment throughout their lifetime.
Even regular vet visits can be difficult to afford given the recent economic inflation, with the U.S. Bureau of Labor Statistics reporting a 10% spike in price from 2022 to 2023.
Pet insurance can provide valuable peace of mind by knowing if your beloved companion ever gets sick or injured, the cost of treatment will never stand in the way of their access to care.
How does pet insurance work?
Pet insurance can help save pet owners money on veterinary care by reimbursing a portion of their eligible expenses. While every policy is different, this is how pet insurance works in most cases:
- Go to any licensed vet or animal hospital whenever your pet is sick or injured, knowing your out-of-pocket costs will be limited with insurance coverage. Pay the vet bill during your visit at the time of service.
- Submit a claim to your insurance company by mail, app, or online internet browser. Some pet insurance companies may require paperwork or a medical history review to process your claim, so be sure to save all receipts and documentation you receive from your vet appointment.
- Get reimbursed for 70% to 100% of covered expenses (after your deductible is met). On average, policyholders get reimbursed within 5 to 9 days after submitting a claim.
Most pet health insurance plans will reimburse you, the policyholder, rather than pay the vet directly. This means you don't have to worry about finding an "in-network" vet and can benefit from your coverage at any licensed vet clinic or animal hospital in the U.S.
đź’ˇ NOTE: Some providers, like Pets Best, offer the ability to pay the vet directly.
What does pet insurance cover?
Your policy will outline which conditions/expenses are covered, your reimbursment rate, your deductible, and the maximum payout (or annual limit).
No pet insurance company will cover a pre-existing condition, so it's important to enroll before any issues arise.
What Does "Deductible", "Reimbursement Rate", and "Limits" Mean?
Insurance terms can be confusing, but they're important to understand so that you can compare coverage and costs properly.
The deductible is the portion of the veterinary bill you’re responsible for before your plan’s reimbursement kicks in. Most pet insurance companies use an annual deductible. Some insurance companies offer a per-incident deductible, meaning if the same injury occurs more than once in future years, the deductible will no longer apply.
Reimbursement Rate is the amount a pet insurance company pays you back for the cost of care. The most comprehensive pet health coverage will reimburse 80% to 100% of your total vet bill (after your deductible is met).
Limits are something you should consider when choosing a plan, especially as you anticipate how much and what type of care your pets might need for their ages and conditions:
- Per-incident limits cap how much you can be reimbursed for a single illness or accident. If exam fees, surgery, lab tests, medications, and follow-up care total $5,000 and your limit is $2,000, you are responsible for over half of the bill.
- Annual limits cap how much you can reimbursed within a 12-month period. Once you hit your plan’s annual reimbursement limit, you are responsible for paying until your coverage resets for the year.
Finally, your premium is the fee you must pay each month (or year) to keep your insurance policy active. A higher monthly premium typically means you’re paying for more coverage, so you shouldn’t always go for the plan that has the lowest premium. Still, a plan with a low premium might be your best option if you’re on a tight budget.
đź’ˇ PRO TIP: If you need to save on monthly costs (your premium), you customize your plan and lower the reimbursement rate, lower the limit, or raise the deductible.
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