What Is Pet Insurance and How Does It Work?

Woman on phone looking at paperwork on cough with dog behind her.
The sooner you sign up for pet insurance, the less expensive it typically is.

Getty Images/sturti

Pet insurance still seems like a fairly new offering to many pet owners but it has actually been available in the U.S. since the early 1980's. Since then, several pet insurance companies have emerged to offer pet owners financial peace of mind for when their pets get sick or hurt. Understanding what pet insurance does and how the claims process works can help you decide whether it is something you need for your pet.

How Does Pet Insurance Work?

Pet insurance is beneficial for people who are concerned about the cost of veterinary care. It is provided through various companies and reimburses a pet owner to help cover veterinary bills.

Most pet insurance works in a similar way to auto or human health insurance. You select a coverage plan and pay a monthly premium. You typically have the option to choose whether your plan covers most health issues, only major illnesses, or something in-between. The monthly rate varies based upon the coverage selected. Other rate factors include your pet's species, age, breed, and reproductive status.

Like human health insurance, pet insurance typically has a deductible that must be met before the insurance starts paying out. Once the deductible is met, a percentage of covered costs is reimbursed based on your specific pet insurance plan.

How to Get Pet Insurance for Your Pet

In order to get a pet insurance policy, you'll need to contact companies directly to get a quote. Monthly premiums vary based on your pet's age, breed, species, where you live, and pre-existing conditions. Some plans may not be available to all pets if they have a number of chronic conditions or are elderly so it is best to get pet insurance while your pet is young.

When getting quotes from companies, you may be able to adjust the deductible amount and compare costs between different types of plans and companies. This can help you get to a price point that you can afford while still providing an acceptable level of coverage for your pet. Many employers even offer a discount through certain pet insurance companies to help you save more.

After you have signed your pet up for a policy, you may need to have a vet examine them within a certain time period before it is activated. There also may be a waiting period before you can make a claim. Be sure to ask your pet insurance provider what they require and whether or not you can see any veterinarian of your choosing.

Types of Pet Insurance

Wellness plans, accident-only plans, and accident and illness plans are the three different types of coverage available.

Wellness Plans

Wellness plans offer the most comprehensive type of coverage for your pet. They provide reimbursement not only for accidents and illnesses but also for routine, preventative services. Different plans will reimburse different amounts for different things but this is typically the most expensive pet insurance option.

Accident-Only Plans

These plans are usually the least expensive insurance option and only cover your pet if they are involved in an accident or get injured. It does not cover illnesses or reimburse you for preventative services like vaccines or spaying and neutering.

Accident and Illness Plans

These are a popular option because, while they don't offer reimbursement for preventative services, they do cover the unexpected, often considerable expenses that arise if a pet is injured or gets sick.

How to File a Pet Insurance Claim

It is important to know that, in general, veterinarians do not directly process pet insurance. You pay the bill yourself and then submit the claim to your insurance company. Your vet can provide the insurance company with medical records when necessary.

If covered, the insurance company reimburses you for a percentage of the bill (based upon your plan's coverage). This requires you to have cash or credit available to pay your vet bills while waiting to get the money back from the insurance company. Therefore, planning ahead for emergencies is still necessary.

Healthcare credit accounts like CareCredit, payment plans through your veterinarian, financial institution credit cards, and personal savings are often used by pet owners to float these bills until the pet insurance reimbursement is received.