Pet insurance 101 – the one stop guide to insuring your non-human family member

Because of the rising cost of pet ownership, many consumers now consider getting pet insurance. This type of insurance policy provides coverage to the pet owner in situations where they face high, unexpected expenses in relation to the care of their pet.

How a pet insurance policy works

This type of insurance can help a pet owner defray the expenses that has to be shouldered in the event the pet or pets fall into illness or get injured in an accident. There are policies that also cover the pet's wellness and routine expenses, which also include yearly health examinations, vaccinations, neutering or spaying.

Just as a regular health insurance policy for humans, a pet insurance plan involves premium payments, deductibles, co-payments and a limit to payouts.

Breakdown of a pet insurance policy:

  • Premium payments – what the consumer pays every month or a year for a plan.
  • Deductible – the portion of the expenses that the consumer pays before the insurer starts making payments. Deductibles are classified as: a) per incident, for every incident the consumer pays an amount, b) yearly deductible, the annual amount paid no matter how many new incidents have taken place in a year.
  • Co-payment – represents the portion of the costs that the consumer pays after paying the deductible. For instance, if a policy provides that co-payments are at 20 percent of covered costs, then the insurer will pay the balance of 80 percent.
  • Max payout – refers to the highest amount allowed by the insurer. This can refer to: a) per incident amounts, b) per year, c) per lifetime, d) per system of the pet's body (i.e., nervous, digestive, musculoskeletal, etc.), and e) per predetermined fee schedule.

Difference between pet insurance vs. health insurance for humans

In a pet insurance plan, the veterinarian gets paid for the services by the consumer or pet owner. The pet owner gets to be reimbursed by the insurance provider when they file a claim.

In a health insurance plan for consumers, the doctor or health service provider submits the bills to the insurer on behalf of the policyholder or insurer.

Also, with many consumer health insurance plans, the insured individual has to use the services of in-network doctors. Pet insurance policies have no networks of veterinarians. A pet owner can bring their pet to any veterinarian in the country and they can still claim reimbursement on his covered expenses.

When to consider insuring your pet

First of all, be aware that because of advances in medical science and technology, there are now many things that can be done for pets to save them from illnesses and help them recover when they get involved in accidents or suffer from injuries.

MSN Money, in 2010, reported the following information that relate to pet care: Kidney transplant and radiation therapy are now used on pets which means that previously considered fatal conditions can now be given treatment. However, the downside to this is the cost, which can be over $5,000. These advancements have inflated the prices of pet health care.

This now leads to the question – if your pet happens to fall ill or gets injured, will your finances be able to cope up with the expenses? Consider the following cost estimates: $500 to $2,500 for an emergency visit to a vet's clinic, $250 to $2,500 for diagnosis and treatment of a chronic disease, and $5,000 up to $20,000 for emergency visits to specialty hospitals or clinics in relation to serious cases.

If you care enough for your pet but do not have the finances to cope with sudden, costly visits to the veterinarian, then a pet insurance policy may be worth considering.

What does pet insurance cover?

Policies can differ as to what is covered and what is not. To give you an idea, here are the things that a plan may cover:

  • Treatment of any injury, illness or accident
  • Congenital and hereditary conditions
  • Diagnostic examinations like blood tests and x-rays
  • Hospitalization of the pet to include any treatment received while being admitted
  • Prescription medicines
  • Surgeries
  • Some plans include coverage for wellness or preventive care

What it does not cover

Policies may not provide cover for the following:

  • Pre-existing health conditions
  • Neuter / spay procedures
  • Some plans do not cover preventive care (which may include titer test, medication for heartworm, vaccinations, deworming, nail triming, parasite control, grooming, dental cleaning.
  • Behavioral therapy or training
  • Feeding
  • Exercise
  • Housing
  • Expression of anal gland

What pets are eligible for insurance?

Again, this depends on the insurance company. Most offer coverage for cats, dogs and even birds. However, there are also those who also cover reptiles, rabbits, ferrets, along with exotic animals.

Many insurers also have minimum and maximum age requirements for cats and dogs. For example, an insurer may require that a dog should at least be 8 weeks old or it should not be older than 14 years.

What types of policies are there?

Traditional plans – these offer predetermined coverage for illnesses and accidents and may even cover some preventive care activities. In this type the insurer will shoulder your qualified pet expenses up to a set amount.

Customizable plans – differs from traditional plans in that the consumer is allowed to customized certain features of a plan to be able to have this fit his needs. The features that are customized are the deductibles, the co-payments, the maximum amount for coverage, etc.

Accident only plans – offers coverage for expenses arising from accidents. No reimbursements are made for expenses related to treatment of illnesses or preventive care.

Discount plans – these allow a policyholder to get discounts from in-network pet care providers like veterinarians or animal hospitals.

How to know which type of plan is for you?

The following factors will help you decide in what plan suits you and your pet's needs best:

  • Budget – premium payments will be lower with discount and accident only policies. But, because the premium is lower, expenses with respect to visits to the veterinarian may eventually be higher. Traditional plans and those that can be customized have wider coverage but will cost you more in terms of premium payments.
  • Pre-existing conditions of the pet and its age – certain traditional policies and customizable plans do not provide coverage to pets that do not fall within its age range and those with pre-existing health conditions. Accident only policies and discount plans may not have these conditions.
  • Breed of pet – certain policies deny coverage to some breeds.
  • The veterinarian of your choice – while other policies will not require it, discount plans do require a policyholder to use the services of in-network veterinarians. So, check if your veterinarian is part of the network of a policy you plan to purchase.

Important features and riders to consider

  • Cancer treatments
  • Chronic disease treatments along with continual coverage for such illnesses
  • Congenital and hereditary disease coverage
  • Coverage for conditions that are common to your pet's breed
  • Coverage for behavioral therapy
  • Coverage for alternative therapy
  • Coverage for preventive and wellness care
  • Coverage for dental illnesses and dental accidents
  • Coverage for prescription medicines

Where and how to buy pet insurance

There are several well-known and established companies selling pet insurance. To name a few, there is VPI, PetPlan, and ASPCA. To expand your choices, you can include other companies found online. If you have friends and families who also own pets, you can also ask recommendations from them.

How to choose an insurance company

To help guide you when shopping for a policy, consider the following tips:

  • Stability of the company – look at how long the insurer has been in the business and see how financially stable it is. Look at the underwriter of the company and check its ratings. A number of insurers are actually franchises of companies that are based in Europe, hence, they may actually be new here in the U.S.
  • Experience and knowledge in veterinary medicine – look at companies with extensive knowledge of the industry or those with trained service providers under them.
  • No networks of providers – a company should allow a consumer to seek the services of providers of their choice.
  • No delays on coverage – avoid insurers who delay coverage after the policy is already in effect.
  • Wellness coverage – while many companies do not cover wellness or preventive procedures, look for one that offers this coverage.
  • Wide coverage – the more coverage on illnesses and conditions, the better for you and your pet.
  • Chronic condition coverage – a company you should look for is one that will allow continuation of coverage for conditions that have been found to be chronic. Avoid those that require you to get a renewal after an incident.
  • Away from home coverage – look for an insurer that allows coverage while you are on travel.
  • Transparency on reimbursements – a company should be transparent when it comes to the schedule of payments as there are those who adhere to a benefit schedule while there also those who adopt a list of customary fees.
  • Detailed explanation on coverage – a company has to be clear on what is covered and not rely on general statements. For instance, if its policy claims to cover congenital and hereditary conditions, would the amount covered be sufficient to cover the costs of treatment?
  • Physical examinations – check on the company's schedule of examinations. Some require yearly tests.
  • Pre-authorization – do not go for companies who require you to secure pre-authorization whenever you go for treatment.
  • How claims are submitted – look at the company's procedures for submitting a claim and what its policy is when you dispute a denied claim.
  • Increases in premiums – look for companies who increase their premiums on the basis of a pet's age and not on the quantity of claims filed.
  • Penalty for cancellation – do not go for insurers who charge a penalty when you opt to cancel your coverage. Also, give preference to those who can reimburse you for all of your unearned premium.

Key questions to ask a pet insurance company or agent

  • Do I have the freedom to go to the veterinarian of my choice?
  • What is covered under your policy and what is not?
  • Is the limit applied on a per-incident basis or is it per illness reported?
  • Is there a yearly or lifetime amount limit?
  • Will reimbursements made to me follow a percentage formula or will it be based on a benefit schedule?
  • Should I expect a waiting period before effectivity of the policy?
  • If I opt for a pre-existing health condition rider, what will be excluded and what will be covered?
  • Is coverage continuous for conditions that are considered long-term?
  • How long will the processing of claims take?

Making a Claim

Generally, the process is as follows:

  • You make payments to your vet for services rendered to your pet.
  • Proceed to secure a claim form from the insurance company. You may be able to get this from the company's website or you may have to request that this be mailed to you.
  • Put in the details in the claim form. The veterinarian may have to fill up some sections of the form.
  • Submit the claim and with it the necessary support documents which can include the invoice or proof of payments you made.
  • Wait for the company to respond to your claim.
  • Receive your reimbursement.

What to do if your claim is denied

  • Review your insurance policy's provisions especially on the following: covered and not covered services and the dispute process.
  • If necessary, call up the company and ask for guidance on how you dispute the denied claim.
  • In many cases, there is an internal process for reviewing a denied claim. This allows to company to see if a mistake or error was made.
  • The company's denial should be clear and has to have a basis. Review the communication coming from the company and see if it holds ground by comparing it with the provisions of your policy.
  • If the internal review upholds the earlier denial but still you think you should not be denied, then you can consider elevating the matter to the department of insurance in your state. Generally, no payments are expected from you when you consider this option.
  • When elevating the matter to the department of insurance, be sure you have all the evidence to back up your argument. You will be required to submit these along with a copy of your pet insurance policy.
  • If the agency upholds the company's decision, your next option is to bring the matter to court. However, here you may have to shoulder all the legal expenses involved. In the event the court rules in your favor, you may be able to recoup your expenses.
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