Is it worth it? Here’s what you need to know before you buy coverage

An animal companion has a way of enriching your life, but if they’re injured or sick, you’ll need to cover the financial fallout from their medical care. If you don’t have hundreds of dollars on hand, this could strain your budget.

This is where pet insurance comes into play. This type of coverage can help you pay for treatment for injuries and illnesses your pet faces. However, pet insurance doesn’t cover every situation, so here’s what you need to know to decide if getting policy is the right move for you (and your pet).

Pet insurance is an insurance contract where you pay a fixed amount called a premium (usually you pay it monthly or annually). When your pet frequently incurs eligible expenses at a licensed veterinarian’s office, your insurance company reimburses you for part of the cost (some pet insurance companies offer the option to pay the veterinarian directly, but this is not that common). .

When you purchase your policy, you and the insurance company agree on how much you will be reimbursed for your pet’s care. There are three moving parts to a pet insurance policy that affect the price and amount you’ll be reimbursed: the deductible, the annual limit, and the reimbursement rate.

Here’s how each of these factors affects how much you’ll be reimbursed or paid:

• The franchise. This is the amount you will pay out of pocket before your insurance takes effect. Your deductible usually resets every year, although some policies have per-accident deductibles to be met every time your pet visits the vet. Be sure to read your policy to figure out if your deductible is per accident or per year.
• Refund amount. The amount you choose to be reimbursed after you meet your deductible, often 70%, 80% or 90% of the cost.
• Annual coverage limit. The maximum amount repayable in any 12-month period. Some insurance companies and policies offer unlimited annual coverage limits.

If you’re shopping for pet insurance, different companies differ based on price, service, and coverage. Our top picks for pet insurance companies include our top pick overall, Spot, and Embrace, our second pick.

The average cat owner spent about $32 a month on accident and illness coverage in 2022, while the average dog owner spent about $53 a month on the same coverage, according to the Insurance Information Institute.

However, pet insurance costs vary based on the type of pet you’re insuring, the breed, age of your pet, the type of coverage you’re getting, the limits you choose, and your location. It’s worth noting that older pets tend to cost more to have insurance, and pet insurance premiums can go up as your pet gets older.

While there are a number of situations where it makes sense to have pet insurance, here are two of the most common scenarios where you should seriously consider purchasing a policy:

You don’t have a very large emergency fund

If your emergency fund is limited and you’re worried about affording a potentially large vet bill, getting pet insurance might make sense. Pet insurance coverage could help you pay for the long-term expense if your pet is in need of immediate and costly veterinary care.

While experts recommend keeping three to six months’ worth of expenses on hand for unexpected situations like a pet injury or illness, this isn’t always possible. Pet insurance could help fill this gap as you work towards building an emergency or savings fund.

Your pet is relatively young and healthy

Similar to life insurance, pet insurance tends to be the cheapest to purchase when the covered party is young and healthy. This is also when you can get an insurance policy with the most benefits, as your pet may not yet have developed any chronic illnesses that could be ruled out as pre-existing conditions.

Pets can often be signed up for pet insurance as young as seven or eight weeks old, but some pet insurance companies have higher age limits.

Before signing your pet up for a new insurance policy, it’s worth making note of the things your policy won’t cover. Because every pet insurance policy is a little different, reading the fine print can help you get a better picture of your coverage.

What your specific policy excludes will be listed in the policy documents and the exclusions can vary by company. Some of the common situations not covered by most policies include:

Pre-existing conditions

Pet insurance almost never covers conditions your pet already had before you signed up for coverage. For example, if your pet had a chronic illness such as diabetes prior to enrollment, expenses related to that condition may not be covered by your pet insurance policy.

Wellness visits and routine expenses

A standard accident or injury and illness policy generally excludes routine costs such as annual vet visits, vaccinations, or other expenses.

While there are policies that cover things like routine vet visits and vaccinations, they’re generally an extra cost. Many of our top pet insurance policies offer wellness coverage. However, wellness plans add to costs, and it may make more sense to pay for these expenses without the help of insurance.

Whether pet insurance is the right move for your pet and your wallet is a highly individual choice. However, knowing what a pet insurance policy would exclude and having a good understanding of your financial situation can help you make an informed decision.

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