How Does Pet Insurance Work?

Pets are family. Some are even more, providing everyday service and emotional support to those of us that need them. Naturally, we want the best for our four-legged companions. And one thing to do as pawrents is research how does pet insurance work.

So, right off the bat…

What Is Pet Insurance?

According to pet health insurance providers, the most an owner can afford to pay out of pocket at any given moment is $1,500. Meanwhile, a single illness or accident treatment can cost anywhere from $2,000 to $5,000.

Pet insurance is meant to significantly decrease or annul the cost of vet bills.

How Does Pet Insurance Work?

Like with other types of insurance, you will have to pay a monthly premium in return for coverage. Most pet insurance companies have flexible packages that you can tailor to your budget and needs. Depending on the plan you choose, the policy will outline the terms and conditions under which it will cover illnesses and injuries, your deductible, and your annual payout limit.

Also, similarly to other insurances, your monthly premium is the price you pay each month for the policy. A deductible is a portion of the payment you need to pay to receive a payout. And the annual limit is the maximum amount the insurer will pay out per year.

There are two ways a pet health insurance company may choose to work with its clients by reimbursing a paid vet bill or by paying the vet directly.


This is the more common way that pet insurance works. With this type of insurance, you pay the vet bill up front and then file a claim with your company for reimbursement. In this case, you will most likely need to save the receipt from your vet and provide a medical report and history along with other documents that may be required.

After successfully filing a claim, it will most likely take 5-10 business days to get your money back. The most common reimbursement rate is between 70% and 100% after the annual deductible is met. Of course, you can always find pet insurance with no deductible.

In-network vet

If you don’t want to pay the bill, you can always find an insurance provider that will pay the vet directly. In this case, however, you will need to find an in-network specialist. The pet insurance carrier will have its own selected group of vets in its network, and your policy will only work if you take your pet to one of them.

What Does Pet Insurance Cover?

What your policy will cover will largely depend on you and what fits in your monthly budget. In general, there are three types of pet insurance plans: accident only, accident & illness, accident & illness + wellness.

Accident only

Accident-only insurance is typically the cheapest package. As the name suggests, it covers medical expenses for your pet for injuries only. Things that are covered in this plan include fractures, cuts, burns, accidental injections, snake bites, and other physical injuries.

Accident & Illness

Accident & Illness plans will cover the previously mentioned accidents plus illnesses like parasites, bacterial and viral infections, colds, dental diseases, hip dysplasia, and even tooth extraction.

According to statistics issued by carriers, 98% of policies are accident & illness policies, making it the most popular pet health insurance choice for owners because it truly contains everything you need and nothing you don’t.

 Accident & Illness + Wellness

The addition of a wellness plan will expand the procedures covered to routine care, exams, and vaccines. This is the most comprehensive pet insurance available, but with that said, it still will not cover pre-existing conditions.

How Much Does Pet Insurance Cost?

Many things can affect your monthly premium and how much you will pay for pet healthcare in general. The current average is $29 for cat insurance and $47 for dogs.

Several key factors will determine your rate. Firstly, insurance for cats is cheaper on average because cats are indoor pets, thus eliminating outdoor risks.

The breed of your pet will also affect the overall cost of pet insurance plans. For dogs, working breeds are generally healthier. A bulldog will be prone to more health issues than a Malinoa, while Huskies tend to be one of the healthiest breeds. However, this is not always true. For example, Labradors are also working breeds but have gotten used to more cozy family life in recent years.

Things like size and age are also very important — the bigger and heavier the pet, the less healthy it is. As for the age, this is compared to the pet’s life expectancy. Premiums tend to go up as the pet gets older. That’s why most companies recommend getting your pet enrolled as soon as possible.

From an economic standpoint, things that will impact the pet insurance cost are:

  • plan type
  • reimbursement rate
  • deductible
  • payout limit
  • number of pets (if multiple-pet discount is available)

Is Pet Insurance Worth It?

Pet care insurance, like every insurance, is one of those things that you don’t need until you do.

Is it worth it?

Honestly, there is no way you can know. Statistically, one in three pets will have an accident at some point in their life, and almost all of them will get ill.

For example, a single accident will cost around $3,000, and cancer treatment can be up to $6,000. And if you don’t have insurance and can’t pay out of pocket, you might face a difficult choice.

On the other hand, you can pay your policy fees for years and never need it for anything serious. Essentially, insurance is a safety net against severe dents in the budget.

Speaking from personal experience, I wish I had some kind of a puppy insurance plan. I have a one-year-old Siberian husky. Given that this is a generally healthy breed, I didn’t take out a policy.

While I did take into account the healthy lineage and the breed, I did not consider that huskies are energetic, curious, and have a wanderlust nature to them. While I could have predicted that while playing in the dog park with other dogs, she might catch the flu, I could not have predicted that she would eat something poisonous and require emergency care. I also couldn’t expect a wasp bite or an attack by a random stranger’s dog. On emergencies alone, this year cost me more than I would like to admit to myself.

Pet wellness care add-ons are slightly different. This is the routine care for your pet that you will be paying for each year anyway, so it’s a somewhat simpler math problem. Add all of the predictable vet bills and see if getting the wellness add-on is worth it or if it makes sense with your policy.

How to Get Pet Insurance

Now that we have figured out how pet insurance works, the pros and cons of having one as well as how big of an impact it might have on our monthly budget, let’s see how we can get one.

First, you need to figure out your budget. Most companies will allow you to include or exclude certain things from your policy, thus personalizing it to your preference. Think about your payment frequency. Most companies will offer a discount if you pay annually as opposed to monthly.

Second, select a carrier you trust. If you are unsure which one, here are our reviews of some of the best companies out there to help you with your choice.

Next, choose a deductible. This requires a bit of guessing. If your deductible is too high, it may not be worth it. Yet, if it’s too low, your premium might increase by a lot. Keep in mind that if you do not reach your deductible, the pet insurance company might not reimburse you.

Finally, choose the reimbursement rate. The higher it is, the bigger the premium. And the same goes for the reimbursement level.

A pro tip: Consult your vet to hear their opinion on the breed, age and size, accident frequency, and just overall experience with pets, owners, and insurance.

Key Takeaways

Paying for medical expenses out of pocket can seriously break the bank. While pet insurance may seem expensive sometimes, keep in mind that a single vet visit can set you back $5,000 on average, and filing a claim is better than never seeing that money again.

I hope that now you know how pet insurance works. Like other insurance types, it’s better to have it and never need it than to need it and not have it.


Does pet insurance cover dental?

Most pet insurance policies do not cover dental care. Some companies offer it, but you will have to pay extra to have pet dental insurance included in the package. If you do have it included in the plan, it’s probably only for a routine check-up and polish or tooth extraction due to accidents.

Does pet insurance cover spaying?

Standard pet health insurance doesn’t cover spaying or neutering. However, you can find some pet wellness programs that will cover these costs along with dental care and vaccines. These wellness plans are typically an add-to to existing policies.

Does pet insurance cover shots?

While insurance won’t cover the cost of the vaccines, having your pet fully vaccinated will decrease your premium. You can always add on a wellness plan for your pet where shots will be included.

Does pet insurance cover surgery?

Pet insurance coverage for surgeries is different depending on the type of surgery your pet needs. The simplest accident plans will cover surgeries related to unexpected illnesses or injuries. However, it will not cover surgeries for pre-existing conditions, elective interventions like spaying, declawing, ears and tail cropping.

Does pet insurance cover pre-existing conditions?

Generally, insurance companies don’t cover pre-existing conditions. Yet, some providers may allow pet insurance that covers pre-existing conditions, but only if the pet has been cleared and not needed an intervention for that condition in the past 12 months. This is why it’s recommended that you enroll your pet as soon as possible.

Can I get pet insurance with a pre-existing condition?

Yes, you can still get pet insurance if your pet has a pre-existing condition. However, your policy will not include related treatments unless the company covers the expenses for pets that have not needed intervention for that condition in the past year.

Do you have to pay vet bills upfront?

Most of the time, yes. Different pet insurance providers have different methods. One is where you pay the bill upfront, and the other is where the company pays the vet directly.

Does pet insurance pay the vet directly?

Some providers, like PetsBest, have a network of vets where if you take your pet there, they will pay the vet directly.

Is pet insurance tax deductible?

Health insurance for your pet is not tax-deductible. However, there are exceptions if you have a service animal like a service dog.

Do all vets take pet insurance?

Yes, every licensed vet takes pet insurance. The difference comes in knowing how pet insurance works, more specifically, your pet insurance policy. Some vets are in a provider’s network, for which they will be compensated by the provider directly.


As an engineering student, I’m learning how things work. And while I may not be able to come up with an ultimate formula for a successful investment I know what the main element is – knowledge. As a content writer, my mission is to provide you with useful information for your financial market venture. When I’m not working I go on very long walks with my dog and watch movies in her fluffy company.

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