How Does
Pet Insurance
Work?
Having pet insurance can mean the difference between being able to say “Yes,” whole-heartedly at the emergency vet or having to take a hard look at your wallet and credit score to see if you can afford to pay in a crisis.
It’s a type of insurance that helps give you peace of mind in case your pet ever has an emergency or develops a lifelong (and expensive) medical condition.
In this guide, we'll walk you through the fundamental aspects of pet insurance: how premiums are calculated, what's typically covered, how claims work, and how to choose the right plan for your pet.
Choosing A Pet Insurance Policy
Pet insurance plans come with a wide range of premium options, from $5 a month to hundreds of dollars per month, depending on what you choose. When comparing different different pet insurance plans, there are four big things that determine what you'll pay and what coverage your pet will receive.
1. The Plan Type
Whether you choose an accident-only or an accident and illness plan (and whether you choose to add-on a wellness package), changes how many services your pet insurance plan can help you with.
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Accident-Only Plans:
These limited plans provide coverage for tests and treatments related to accidents, like eating something toxic, swallowing a toy, being bitten, or being hit by a car.
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Accident and Illness Plans:
Also sometimes called "full coverage" plans, these provide coverage for accidents, as well as for tests and treatments for illnesses and conditions like arthritis, diabetes, hyperthyroidism, cancer, and orthopedic problems.
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Wellness Plans:
These plans are typically add-on packages to provide coverage benefits for preventative healthcare vet visits, like the annual exam, vaccinations, and parasite prevention.
2. The Deductible
This is how much you’ll have to pay out-of-of-pocket for covered services before the pet insurance starts helping out. Pet insurance deductibles range from $100 to thousands of dollars. Lower deductibles means the pet insurance company gets to work sooner, but means you’ll pay a higher monthly premium.
3. The Reimbursement Rate
This is how much your pet insurance company will pay for covered services. Usually it’s offered at three different tiers: 70%, 80%, and 90%. If you got a vet bill for $100 (and had already used up your deductible and all of the services on the bill were covered under your plan), the pet insurance company would pay for $70, $80, or $90, respectively.
4. The Annual Limit
This is the maximum dollar amount the pet insurance company agrees to pay out per year. It can be as $1000 or it can be unlimited–but be careful! An unlimited policy usually comes with a very high premium.
Also watch out for lifetime limits, where the pet insurance company has a cap on how much they’re willing to pay out over the lifetime of each pet.
You might have noticed that we didn't talk about your pet insurance policy's premium cost. That's because the premium is based on a combination of the four factors above, and you can find very similar premiums for very different coverage and reimbursement plans.
Which Plan Should You Pick?
It all depends on what you're using pet insurance for.
If you're looking for an emergency safety net, you'll probably go with an accident-only plan, and choose a deductible, reimbursement rate, and an annual limit based on "how big of an emergency should it be before I need insurance to help--and how much help will I need at that point?"
If you want to start a policy to give your pet long-term healthcare coverage for their entire life, you'll want to sign up for an accident and illness policy before they develop any signs of a pre-existing condition.
And if your pet has a lot of routine or preventative health expenses (or you're welcoming a new puppy or kitten into your family), a wellness plan can help budget those expenses.
What Happens After Signing Up
Once you’ve signed up for a policy, several cool things happen:
- You’ll get access to your pet insurance’s customer portal and app to explore and discover new resources;
- If your pet insurance company offers discounts or specials with pet supply companies or retailers, you’ll get access to those coupons; and
- If you’ve signed up for a wellness package, you can usually get your pet’s annual exam covered the next day.
Most importantly, the clock starts on any waiting periods your pet insurance company has.
Waiting periods are how pet insurance companies make sure that people don’t sign up when their pet is in the emergency clinic and then drop their $20/month policy as soon as their pet is healthy. It can feel frustrating, but without waiting periods, everyone’s premiums would be sky-high.
Typically, there isn’t a waiting period for wellness plans; they only cover preventative services, so they kick in right away. That said, there are three waiting periods to pay attention to:
- Accident coverage usually starts within a few days (or a couple weeks) after signing up.
- Illness coverage usually starts within a couple weeks or a month.
- Orthopedic condition coverage can take longer, from six months to a year or more.
Secure Your Pet's
Health Future Today!
Inadequate coverage could cost you tens of thousands of dollars.
Review your pet
insurance policy and
identify any coverage
gaps for free
What Happens When Your Pet Needs Vet Care?
1. Visit Your Local Vet (or Vet Hospital)
Most pet insurance companies allow you to go to any licensed veterinarian in the U.S.A. (though double-check that your pet insurance carrier is licensed in all 50 states before traveling). Unless you’ve chosen a policy with a specific network, you’ll be able to go to your normal vet for help.
2. Take Care Of Your Pet
We wish your pet an easy and speedy recovery! Depending on your policy, your pet insurance company may require you to follow veterinarian advice and recommended treatments. For example, if your veterinarian recommends amputating a limb and you decide against it, your pet insurance company may not offer coverage for future vet costs related to that limb.
3. Pay The Vet
Most pet insurance plans work on a reimbursement model, meaning you pay the vet first and the pet insurance company pays you back later. There are a couple pet insurers who offer direct pay (where they pay their portion of the bill directly to the vet), but it’s less common.
4. Give The Bill To Your Insurer
Whether through the customer portal, an app, or via fax machine, you’ll send a copy of the vet bill to the insurance company. The vet bill is itemized for all of the different services and treatments that happened, and the insurance company will analyze it to figure out which ones are covered under your pet’s policy. Then, they’ll do the math to figure out how much they need to pay you.
5. Receive The Reimbursement
The pet insurance company will pay you back their portion of the vet bill, taking into account your deductible and maximum annual limit. This reimbursement is usually via direct deposit or a check within a couple weeks of sending in the bill.
What's Typically Covered?
Pet insurance plans vary in what they cover, but most comprehensive accident and illness plans will include the following conditions and treatments.
Always check your specific policy details as coverage can vary significantly between providers.
Common Covered Conditions:
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Accidents including broken bones, cuts, and ingestion of foreign objects
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Illnesses such as infections, digestive issues, and allergies
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Chronic conditions like diabetes, arthritis, and skin conditions
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Cancer treatments including surgery, chemotherapy, and radiation
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Hereditary conditions if not pre-existing when coverage begins
Common Covered Treatments:
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Diagnostic tests including blood work, X-rays, ultrasounds, and MRIs
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Surgeries to treat injuries or illnesses
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Hospitalization including overnight stays
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Prescription medications for diagnosed conditions
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Emergency vet visits and related treatments
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Specialist care when referred by your regular veterinarian
Pet Insurance In Action
Pet insurance can feel confusing, especially since the premium, deductible, and reimbursement process all impact each other. Here's an example of what it looks like in practice.
The Plan
Our example is based on an accident & illness plan for a mixed breed, male, 5-year-old, medium-sized dog (named Marlo) based in Spokane, WA. He has no pre-existing conditions.
- Deductible: $250
- Reimbursement Rate: 80%
- Annual Coverage Limit: $5,000
- Premium/month: $46/month
The Vet Bill
$800 – a cost we might expect if Marlo swallowed a chew toy and got a very expensive trip to the emergency vet, or got a relatively inexpensive bite wound that he needed treatment for. This is also equivalent to approximately a 12-month supply of insulin (without including any other costs for treating diabetes).
We’re also going to assume that all $800 of the vet bill is covered by Marlo’s plan.
The Outcome
First, Marlo’s pet parents are responsible for the deductible: $250.
Then, the insurance company calculates what they’re responsible for, based on the remaining $550. The insurance company pays for: $550 * (80%) = $440. This leaves Marlo’s parents with the rest of that $550, or $110.
In total, Marlo’s parents paid $360 to cover the treatment, plus what they paid in premiums up to that point. As a silver lining, if Marlo gets into more trouble later in the year, they’ve already used up the deductible.
How to Choose the Right Plan
Selecting the right pet insurance plan involves considering several factors to balance coverage with cost
1. Evaluate your pet's specific needs based on breed, age, and pre-existing conditions
2. Compare coverage options and exclusions between different providers
3. Determine the maximum annual coverage you need based on potential treatments
4. Consider what deductible and reimbursement percentage fits your budget
5. Check if you need wellness coverage for routine care or just accident and illness protection
Most experts recommend enrolling your pet when they're young and healthy to secure the best rates and avoid pre-existing condition exclusions.
Need help choosing? Use our comparison tool to find the perfect pet insurance plan for your furry family member.
Secure Your Pet's
Health Future Today!
Inadequate coverage could cost you tens of thousands of dollars.
Review your pet
insurance policy and
identify any coverage
gaps for free