If you would stop at nothing to save or improve the life of your pet, the costs can add up fast. Now you can buy pet insurance in case your pet needs medical attention that you can't afford. Veterinarian Karen Halligan explains pet insurance and how to decide if it's for you.
Like all insurance, with pet insurance you're paying for something you may never use. But in the event you need it, you should be sure the coverage is there. Health insurance for both people and pets is a business and it stays alive by making a profit. By definition, pet insurance insures against emergency costs while charging monthly premiums whether or not claims are made. That, of course, is the essence of insurance. Either you take the risk or you pay the insurance company to take the risk on your behalf.
If you're the kind of pet owner who would stop at nothing to save or improve the life of your pet, the dollars can add up quickly. A hit-by-car accident could easily cost upward of $5,000 in vet bills, especially if your pet is in intensive care in a 24- hour hospital, which costs around $500 per day. You pay for insurance in case your pet needs medical attention that you can't afford.
What Is Pet Insurance?
Pet insurance pays a portion of your vet bills in exchange for a monthly premium. Typically you pay the vet bill upfront and the insurance company reimburses you an amount that is stated in your policy.
Although there are differences, pet insurance is similar to human health insurance with deductibles, maximums, and co-pays. The portion that's paid to you is contingent on your policy and the stated conditions that are covered.
Pet insurance usually doesn't cover all treatments that your cat or dog might need. It's not inexpensive or without its share of problems. I've heard some clients complain that it has taken six to seven weeks to be reimbursed for a claim when the policy promises to pay in thirty days.
The least expensive policies run about $10 a month, with premium plans up to $50 a month or more. The cost of insurance increases as the coverage improves. That means you could easily spend up to $7,200 on premiums over your pet's lifetime.
How Pet Insurance Works
Is pet insurance worth the price? You need to weigh the cost of the insurance against the likelihood of submitting a claim. Pet insurance, like human health insurance, works best to cover unexpected and expensive situations. If your pet ends up hospitalized with a serious illness, coverage will be a godsend and can save you hundreds, if not thousands, of dollars. Pet health insurance is inexpensive compared to human health insurance.
There are two basic kinds of health plans. First, like human insurance plans, there are companies that pay a percentage of the charges after you pay a deductible first. Second, there are price-reduction plans that, for an annual fee, cover a small percentage of virtually any pet-related charges. Usually, the smaller the deductible, the higher the premium. As with human health insurance, the more expensive plans have higher limits.
Unlike human health insurance plans, though, pet insurance plans may have age restrictions, and there are limits to what a company will pay. Compared to human insurance, which offers a lifetime maximum of around $3 million, pet insurance offers a lifetime maximum of approximately $150,000. There are also per-incident limits and annual limits to what a company will pay out.
To Insure or Not to Insure
What do you think the odds are that your pet will have an accident or become ill? You need to carefully analyze your pet's lifestyle. Does it often get into fights with other dogs or cats, get into the garbage, have a tendency to eat nonfood items, or have a pet's family history of hip dysplasia, diabetes, or some other genetically predisposed condition?
When it comes to pet insurance, you can't decide on price alone, so arm yourself with knowledge to secure the insurance policy that's best for you and your pet. I recommend that you add up how much you spend a year on veterinary care for each pet and separate the costs into routine care versus accidents and/or illness. Develop estimates for one to five years and then see how expensive the premium would be for the same period and how much of your expenses the pet insurance policy would cover. You also need to consider the age of your cat or dog and their potential to have health problems. Usually, lower monthly premiums come with higher deductibles and/or larger co-payments.
Pet Insurance Tips
Look for a health insurer that has been in business for at least a couple of years.
Ask your vet and other pet owners for recommendations.
Search the Internet for complaints against or praise for the insurance company you're considering.
Make sure the company is licensed in your state. Not all plans operate in all states. Be sure to check that your provider is licensed by the Department of Insurance and is regulated in your state.
Contact your state's Department of Insurance about the company you're considering and any consumer complaints against it, and get the scoop on insurers operating in your state.
Read policies very carefully for conditions and exclusions before enrolling. Many policies don't cover hereditary or congenital defects and others will cover preexisting conditions only if the dog or cat has not needed treatment in at least six months.
Consider the specific health needs of your dog or cat.
With new puppies or kittens, consider getting a policy that covers routine care as well as injuries and illnesses.
Think about your pet's age. The best time to purchase a policy is when your pet is young. That way you won't have to worry if your pet develops a long- term health problem and thus has a preexisting condition.
Consider plan affiliations. See if your employer or the pet-industry organization you belong to has an affiliation with one of the plans. Some companies make a contribution to premiums while others ensure that employees get a group rate.
For older pets, consider policies that cover routine dental cleaning, prescription medications, and diagnostic tests such as blood tests, X-rays, ultrasounds, and ECGs.
The older your pet becomes, the more the premiums will cost, and they can be quite high for an older pet, even a healthy one.
Read the fine print, understand the limitations, and look for exemptions.
Talk to other pet owners with insurance.
Consider your pet's lifestyle. Active, outdoor pets are at higher risk.
Ask yourself if you're looking for a discount plan or a comprehensive insurance plan. These can differ. With discount fee plans, you pay an annual fee and get discounted veterinarian and related pet services. A comprehensive pet health insurance plan would operate similarly to human health insurance.

Self-Insurance
Another option is to self-insure. In lieu of pet insurance, you can open a savings account for your pet and deposit a few dollars into it every week to pay for unexpected vet bills. Then you'll know the money is there if you need it for your pet's health emergency. Of course, this only works if you're a disciplined person and can put the money aside in the first place. This is a step toward peace of mind, but it can be difficult not to occasionally borrow from the emergency fund. What happens when your pet's emergency savings is used up? You have to start saving all over again. In addition, since the cost of treatments can be high, you could use up all you've saved on one accident or illness and not have enough money when another one arises. That's why pet insurance is worth investigating.