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How does Pet Insurance work?
According to the North American Pet Health Insurance Association, as of 2019, there are 179 million pets in North America that create an estimated $58.5 billion in annual spending. Vet care is the third largest expenditure in the category, costing pet owners about $15.25 billion per year.
Americans have taken notice of the rising cost of veterinary care. More than one million pets are now covered under a pet insurance policy at a collective cost of $595 million. It's a relatively new industry: It wasn't until that famed canine, Lassie, first received a pet insurance policy in 1982 that pet insurance became a formalized option. Since 2009 the industry has grown an average of 13.2% annually; from 2012 to 2013 there was a 14.6% increase in active policies. Currently, pet insurers write over 1.5 billion dollar in pet insurance premiums in the United States. Finding the best pet insurance depends a lot on what your pet situation is and what kind of coverage you're looking for.
Despite its growing popularity, finding information on pet insurance isn't easy since only a handful of companies hold nearly 90% of market share. Here's what you need to know.
It's Not Like Human Health Insurance
You love your pet like a member of the family but the insurance industry sees Fido or Fluffy more as property. That's why pet insurance functions more like property insurance than health insurance. But before you remind somebody that your pet isn't a piece of property, this designation works in your favor. Reading and understanding the policy is a cakewalk compared to health insurance policies written for humans. Consider these advantages:
1. You can choose your vet. As long as the vet is licensed, pet insurers won't tell you whom you can and can't see. There are no in- or out-of-network doctors like those your own health insurance policy probably dictates.
2. Simple policies. Most companies have a small number of tiers to choose from. One may cover only accidents, another may cover accidents and illnesses, and a third provides more coverage for more conditions.
3. Premiums are relatively cheap. The average monthly cost for a dog with the lowest tier policy was less than $14 per month. The top plan averages $98 monthly. Of course, cost depends on a host of variables including breed and age of the animal, where you live, and the options you choose as part of your policy. Cats are even cheaper.
If you understand insurance-speak, you can figure out a pet insurance policy. You will pay a monthly or annual premium, you have to pay a deductible (a certain amount before the policy kicks in) and you may have a co-pay. Annual deductibles are generally low - between $100 and $250 - and expect your co-pay to be no higher than 30% of the cost in the worst-case scenarios.
There is one major difference compared to many human healthcare policies. The first person to pony up the money is you - not the insurance company. In other words, as the sign at some doctors' offices says, "Payment is due at the time of service." After you pay, you file a claim with your pet-insurance provider and wait for a check.
Some veterinarians may allow you to forego payment until the insurance company pays its portion. But before you say yes to that high-dollar procedure make sure you're clear about the method of payment.
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What If My Pet Isn't a Dog or Cat?
Your choice of insurers might only be one or two right now. In fact, dogs alone represented 90% of all policies in the Americas in 2013 - the latest data available. Cats accounted for most of the remaining 10%.
If you have a bird, iguana or other pet check out Veterinarian Pet Insurance, (VPI) a division of popular insurer Nationwide. It's probably the largest and well-known provider of exotic pet insurance.
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What are the rules for enrollment for my pet?
A young, healthy pet will qualify for any plan, but some plans won't let you enroll senior pets. Generally, puppies and kittens must be 6 to 10 weeks old at a minimum, depending on the insurer. Although some plans have no maximum age limits, many cut off first-time enrollment at 10 to 14 years. Once you're enrolled, though, most plans will offer coverage for life as long as you continue paying the premiums.
Some plans also require your pet to have seen a vet in the past year, or they'll require your pet to undergo an exam before they'll sell you a policy.
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What does pet insurance typically cover?
Some pet insurance companies offer accident-only plans as well as more comprehensive plans covering both accidents and illness (accident & illness plans).
An accident-only plan covers treatment of injuries after a mishap, such as a car accident or poisoning (think dog plus chocolate). If you have an accident-only plan, the insurance company won't pay a cent if your best pal gets sick.
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What types of treatments are generally covered?
Here are some of the areas where coverage can vary among plans.
- Alternative and behavioral treatment: Some plans cover behavioral care and a wide range of alternative treatments, such as acupuncture and chiropractic care. Others don't cover them at all, or companies limit such coverage to the most expensive plans. If you want coverage for alternative medical care, read the details of which treatments are covered, because there is no standard definition of alternative care.
- Continual treatment: If your pet develops a condition, some plans won't extend coverage for it in the next year after your policy renews, unless you pay extra for continual care.
- Exam fees: Some plans reimburse you for procedures and drugs but don't cover exam fees, either for routine checkups or when your pet is sick.
- Routine and wellness care: Most plans don't cover the basics like annual vaccinations, spaying, neutering and teeth cleaning; many pet insurance companies do offer the option of adding such coverage, but it will carry an additional cost.
- Don't assume that your insurance policy covers every single condition your pet has or will ever have: Most pet health insurance agencies do not provide coverage for either hereditary conditions or pre-existing ones. There are frequently limits to how much money you can claim for a particular condition or illness. Furthermore, it is not uncommon for pet insurers to deny coverage for incidents for which your animals may be at fault (i.e. if your dog runs in front of a car or your cat swallows a plastic toy.)
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How much does pet insurance pay? Is there a limit?
A few plans don't cap how much they'll pay out for covered treatments, but most plans have maximum payouts. Here's where you need to read the policy language carefully. There may be a payout limit for the year, for your pet's lifetime or for a type of incident or condition. Or there might be a combination of caps.
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Does pet insurance make you pay a deductible like human insurance?
Yes, most do. There are typically two types of deductibles. Annual and "per incident". The deductible is the amount you pay out of pocket before the insurance company starts paying. Under some pet insurance plans, the deductible is applied annually. Once you've paid the deductible toward covered treatment, the plan starts reimbursing you. The deductible is reset when you renew the policy each year. In some cases, a certain percentage of the covered amount to a deductible.
Under some other plans, the deductible is applied per incident. Once you pay the deductible toward treatment of a particular injury or illness, the plan reimburses you up the policy's limits, even in subsequent plan years. The downside? If your pet develops a few different medical problems in one year, you have to pay the deductibles for each one.
After the deductible is met, your policy may have a co-pay requirement. The co-pay is what the patient is responsible for for each covered service. For example, the fee for a service is $100.00. If you have a 20% co-pay, your responsibility is $20.00 and the insurance company pays $80.00. The deductible is often chosen by the consumer depending on what reimbursement level is chosen.
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Does Pet Insurance cover Pre-existing conditions? What is a Pre-existing condition?
Pet insurance plans don't cover pre-existing conditions, but the definition of "pre-existing" varies. In most cases, a pre-existing condition is a medical problem that was apparent in your pet before you bought the policy. However, some plans will cover past conditions that have been cured for a certain number of months.
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What are "exclusions" in a pet policy?
Besides pre-existing conditions, some plans exclude coverage for certain illnesses and conditions. For example, some insurers won't cover hip dysplasia, a genetic disorder in which the hip joints fail to develop normally; it's common in large dogs but can also be found in cats. Exclusions need to be specifically listed in the policy or the insurance company may be forced to cover it.
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What are "waiting periods" in pet insurance?
Pet insurance plans have waiting periods for coverage to begin after you sign up. Typically, the coverage for injuries from accidents begins within a day or two. The waiting period for illness coverage is usually longer - 14 days or more.
There might also be waiting periods of several months to a year or more for orthopedic problems. In such cases, if your pet needs treatment during that crucial time period, the plan will pay nothing.
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How is Reimbursement determined?
Pet insurance plans reimburse you a percentage of the treatment costs. You choose the reimbursement level when you buy the policy, such as 70%, 80% or 90%.
Read the details of how reimbursement works. Some plans reimburse you a percentage of the vet's bill. Others reimburse you a percentage of the "usual and customary charges" for treatment. Any amount the veterinarian bills you above that is your responsibility.
Confusion around reimbursement is one reason California passed a law in 2014 requiring pet insurance companies to disclose important information about their policies and provide a 30-day "free look" period. For example, one California consumer bought a pet insurance plan that promised a 90% reimbursement rate. But after his dog developed cancer, the plan covered only 90% of the amount allowed under its "benefit schedule," which set maximum payout amounts for medical care based on the diagnosis. The result? He was reimbursed only one-third of the cost of his dog's cancer diagnosis and treatment.
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How much does pet insurance cost?
In 2019, the average annual premium for a pet insurance policy covering accidents and illness in the U.S. and Canada was $433 in 2014, according to the North American Pet Health Insurance Association. The average annual premium for an accident-only plan was $154.
Prices for pet insurance are based on:
- Your pet's age and breed: The older your pet is, the more you'll pay. Some breeds are more expensive to insure than others because they tend to have more health problems.
- Your ZIP code: Local costs of veterinary care affect premiums.
- Amount and type of coverage: The more the policy covers, the more you'll pay.
- Reimbursement level and deductible: The lower the reimbursement level and higher the deductible, the less you'll pay for the plan.
- Insurance company: Prices vary by company.
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What should I watch out for when buying pet insurance?
First, if your pet has pre-existing conditions, your policy probably won't cover them. If your animal has abdominal pain, for example, some companies may try to limit coverage on any condition that lists abdominal pain as one of its symptoms. Before saying yes to a pet insurance policy, talk to the company and have it clarify how it decides what constitutes a pre-existing condition. Something in your pet's medical records that is harmless may become a big deal if you later file a claim.
On a related note, you may have to get your pet checked out by a vet before getting coverage if it hasn't seen a vet in more than a year.
Next, waiting periods. You can't take out pet insurance when you learn that your pet requires a costly procedure. Insurers know that trick. That's why they instituted waiting periods. Waiting periods vary by state, but will generally be 24 to 48 hours for accidents, and from 14 days for an illness to one year on certain medical conditions, depending on the type.
Ask about maximum payouts. These might include maximums per incident, per year or over the life of the policy. Generally, the highest-level policies have the highest payouts.
Finally, most policies will increase your premium to account for rising costs and for the condition and age of your pet. However, some companies do not. Ask about rate increases before signing the policy.
If you believe your claim has been improperly denied, delayed, or underpaid, please email us for a free case evaluation at Attorney@BabinskyNeimand.Com or call us at 786-744-5129. We service all 67 Florida counties.
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