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What Is Pet Insurance and How Does It Work?
Look beyond the cute puppy and kitten photos on pet insurance websites and learn how the plans truly work.
Like human health insurance, pet insurance covers the cost of medical care. If your furry friend gets seriously sick or injured, the vet bills for treatment can add up fast. A pet insurance policy can help you pay them.
Pet insurance is designed to cover unexpected costs, so it may not pay for routine care or conditions your pet had before you bought the policy. Because it’s not a policy you’re required to buy, some people may decide to cover all of their pet’s medical expenses themselves instead of buying insurance they’re not sure they’ll use.
There are three main types of pet insurance plans:
Accident and illness. The most common type of pet insurance, these plans cover treatment for illnesses and accidental injuries.
Accident-only. These plans tend to be more affordable. They’ll pay if your pet swallows a toy or is hit by a car, but not for any illnesses such as diabetes or arthritis.
Wellness or preventive care. This type of coverage is usually an add-on to one of the policies above. It’ll pay for well visits, vaccines and other routine care.
Pet insurance is designed to cover unexpected costs, so it may not pay for routine care or conditions your pet had before you bought the policy. Because it’s not a policy you’re required to buy, some people may decide to cover all of their pet’s medical expenses themselves instead of buying insurance they’re not sure they’ll use.
There are three main types of pet insurance plans:
Rated 5/5 on NerdWallet
1.
Embrace
Many ways to customize your coverage and monthly rate- Reimbursement amounts up to 90%
- Covers curable pre-existing conditions
- Discounts available, including 10% multi-pet discount
See Details
on Embrace's website
2.
Healthy Paws
- Rated 4/5 on NerdWallet
- Simple plan that covers accidents and illnesses with no annual limit
- Many claims are processed within two days
- Deductibles starting at $100
See Details
on Healthy Paws's website
3.
Spot
- Covers what others don’t: prescription food, microchips, and behavioral therapy
- Offers preventative treatment and screenings plans
- No upper age limit for coverage of older pets
- 10% multi-pet discount
See Details
on Spot's website
4.
Lemonade
- Easy claims submission process through the app
- Quick claims payout, with about 50% paid immediately
- 5-10% discounts available for some customers
- Donates a portion of profits to pet charities
See Details
on Lemonade's website
5.
ASPCA
- Generous coverage options, including wellness and accident-only plans
- Shorter waiting periods than most insurers
- 10% discount for veterinarians and multiple pets
- In addition to cats and dogs, horse plans are also available
See Details
on ASPCA's website
6.
Fetch
- Ideal if you want a lot of coverage with a high reimbursement rate
- Covers what other insurers may not: cancer, acupuncture, and behavioral therapy
- Offers $1,000 in boarding fees if owner is hospitalized
- Pays up to $1,000 for virtual vet visits
See Details
on Fetch's website
7.
Pumpkin
- Rated 4.5/5 on NerdWallet
- 10% discount on additional pets you insure
- Covers dental illnesses and some pre-existing conditions
- Annual limits range from $7,000 to unlimited
See Details
on Pumpkin's website
8.
MetLife
- In most states, your deductible reduces each year without a claim
- Covers what others don’t: alternative therapies and holistic medicine
- No waiting period for accident coverage
- 24/7 vet chat service available
See Details
on MetLife's website
How does pet insurance work?
Once the waiting period is over, your pet’s vet expenses will be eligible for coverage as long as you continue to pay your premiums. Depending on your insurer, you may be able to pay on a monthly or annual basis.
Most pet insurance plans allow you to bring your furry friend to any licensed vet for treatment, so you don’t need to worry about whether a given clinic is “in network.”
In most cases, you’ll pay the vet bill upfront, then submit your receipt to the insurance company for reimbursement. However, some pet insurers may be able to pay your vet directly so you don’t have to put out as much of your own money.
Rated 5/5 on NerdWallet
Embrace
- Many ways to customize your coverage and monthly rate
- Reimbursement amounts up to 90%
- Covers curable pre-existing conditions
- Discounts available, including 10% multi-pet discount
See Details
on Embrace's website
Here are a few factors that could affect how much of your vet bill your insurer will cover.
Payout limits: Some plans don’t cap how much they’ll pay for covered treatments, but many insurers have maximum payouts. (In many cases you can choose either an annual limit or an unlimited option.) Here’s where you need to read the policy language carefully. There may be a payout limit for the year or for a certain incident or condition.
The higher your payout limit, the more your plan will cost.
Deductibles: A deductible is the amount you pay out of pocket before the insurance company starts paying. Under many pet insurance plans, the deductible is applied annually. Once you’ve paid the deductible toward covered treatment, the plan starts reimbursing you. The deductible is reset when you renew the policy each year.
Under some other plans, the deductible is applied per incident. Once you pay the deductible for a particular injury or illness, the plan reimburses you up to the policy’s limits, even in subsequent plan years. This can save you money if your pet develops a chronic, lifelong condition. But if your pet develops a few different medical problems in one year, you have to pay the deductibles for each one.
Raising your deductible is one way to save money on your pet insurance premiums. Just make sure you’ll feel comfortable covering the higher amount if your pet gets sick.
Reimbursement levels: Pet insurance plans generally reimburse you a percentage of the treatment costs. You choose the reimbursement level when you buy the policy, such as 70%, 80% or 90%.
Read the details of how reimbursement works. Most plans reimburse you a percentage of the vet’s bill. Others reimburse you based on a benefit schedule they’ve established for each condition; if the vet charges more than the amount on the benefit schedule, you’re responsible for the difference.
Choosing a higher reimbursement amount generally means you’ll pay more for your plan.
Payout limits: Some plans don’t cap how much they’ll pay for covered treatments, but many insurers have maximum payouts. (In many cases you can choose either an annual limit or an unlimited option.) Here’s where you need to read the policy language carefully. There may be a payout limit for the year or for a certain incident or condition.
The higher your payout limit, the more your plan will cost.
Deductibles: A deductible is the amount you pay out of pocket before the insurance company starts paying. Under many pet insurance plans, the deductible is applied annually. Once you’ve paid the deductible toward covered treatment, the plan starts reimbursing you. The deductible is reset when you renew the policy each year.
Under some other plans, the deductible is applied per incident. Once you pay the deductible for a particular injury or illness, the plan reimburses you up to the policy’s limits, even in subsequent plan years. This can save you money if your pet develops a chronic, lifelong condition. But if your pet develops a few different medical problems in one year, you have to pay the deductibles for each one.
Raising your deductible is one way to save money on your pet insurance premiums. Just make sure you’ll feel comfortable covering the higher amount if your pet gets sick.
Reimbursement levels: Pet insurance plans generally reimburse you a percentage of the treatment costs. You choose the reimbursement level when you buy the policy, such as 70%, 80% or 90%.
Read the details of how reimbursement works. Most plans reimburse you a percentage of the vet’s bill. Others reimburse you based on a benefit schedule they’ve established for each condition; if the vet charges more than the amount on the benefit schedule, you’re responsible for the difference.
Choosing a higher reimbursement amount generally means you’ll pay more for your plan.
