• Article

Pet Insurance: What You Need to Know

Illnesses · Injuries · Medications · Therapies

Pet-insurance companies cover a wider range of illnesses and injuries than ever before. However, experts say you should get your pet covered early in its life to make sure that it’s eligible for health coverage at all.

Email to a Friend

Age Fotostock

Most people will do anything for their pets. Consumers will spend $69.4 billion on their pets in 2017, according to American Pet Products Association (APPA). About 24 percent of a consumer’s annual pet costs go toward veterinary care, APPA says.

The average veterinary bill in 2015, which is the most recent year for which data are available, was $786 for dogs and $594 for cats. The cost of veterinary bills rises by about 7 percent annually, experts say, because of increases in veterinarians’ ability to diagnose and treat ailments; the development of equipment, such as CAT scans and MRIs, that makes higher levels of treatment possible; and the increasing availability of advanced care, such as organ transplants, open-heart surgery and prosthetic limbs, and of alternative treatments, such as acupuncture and water rehabilitation. Meanwhile, emergency-clinic bills typically start at $500 and run as high as $20,000 in extreme circumstances.

As a result of rising pet-health-care expenses, more Americans than ever before buy pet medical insurance. North American Pet Health Insurance Association (NAPHIA) says about 1.8 million pets were insured in 2016 in North America, compared with 1.62 million pets in 2015. Just more than 1 percent of all pets in the United States are covered by pet insurance, according to NAPHIA. However, experts tell us that the number of covered pets will continue to rise, in part because employers increasingly provide pet insurance as an optional benefit. Willis Towers Watson, which is a risk-management advisory company, says 36 percent of U.S. companies provided pet insurance as an optional benefit in 2015.

We found 12 companies that sell pet insurance, most of which are stand-alone companies instead of being part of a larger company that sells other types of insurance. Experts tell us that a handful of companies came and went during the past 10 years. In light of this, experts recommend that you select a pet-insurance company that’s been in business for at least 10 years. This increases the odds that the provider will be around throughout your pet’s life. We found that two companies started to sell pet insurance in the past 4 years (Figo and Pet Premium); all of the other companies that we found started in 2009 or earlier.

Click above to view full presentation

Click above to view full presentation

Pet-insurance companies typically tout their services for cats and dogs that are age 5 or younger (read: low risk). Experts tell us that pet-insurance companies often don’t advertise their services for older (read: high risk) cats and dogs. However, most companies insure cats and dogs that are as old as age 14.

Older pets are more expensive for you to cover. Plans typically cost $20–$50 per month for a 5-year-old cat or $40–$120 per month for a small 5-year-old dog. That said, prices vary widely depending on your pet’s age. We found plans that cost as much as $560 per month to insure a large 12-year-old dog. Prices also vary depending on your pet’s breed, health history and where you live. (Breeds that are known to be more susceptible to hereditary conditions are more expensive to insure, and companies typically charge insurance rates that are based on the general costs of the veterinary care that’s in the pet owner’s area.)

Twelve experts tell us that pet-insurance policies cover a wider range of conditions than ever before. As a result, experts say, consumers spend increasing amounts of money each year on pet-insurance premiums.

The average annual dog-insurance premium in 2016 was $517.63, compared with $465.02 in 2015, according to NAPHIA. The average annual cat-insurance premium in 2016 was $321.27, compared with $316.30 in 2015, NAPHIA says. Pet-insurance premiums typically are paid monthly.

As a result of the increasing number of pet-insurance options and the complexity in the way that those options are customized and priced, we found that it’s more confusing than ever before to compare pet-insurance options. We also found that the fine print that’s in a pet-insurance policy is full of potential problems for unwitting pet owners.

Back to Article