What are the basic components of a pet insurance policy?
Pet insurance is similar to health insurance for humans. They both include annual premiums, deductibles, annual limits, and copays.
Pet insurance coverage types
There are three basic components of pet insurance: accident-only, accident and illness, and wellness coverages. Each level determines the type of care covered as well as the cost.
- Accident Only (AO) policies only cover accidents such as car accidents, foreign body ingestion, lacerations, poisoning, and ligament tears.
- Accident and Illness (A&I) policies are also known as "comprehensive policies," since they cover accidents plus minor and major illnesses such as cancer, diabetes, infection, and digestive problems.
- Wellness policies cover routine and preventative care such as annual check-ups, vaccinations, and routine dental care. These policies tend to be riders to A&I policies.
Pet insurance plan customizations
Insurance companies offer additional coverage options such as emergency treatment overseas and liability coverage for injuries caused by a pet. In addition to the different riders pet owners can add to the policy, pet owners have other ways to customize their plans.
- Annual limit: Plans typically have an annual limit ranging from $5,000 to $20,000. Some plans offer even higher amounts, to include unlimited limits. These policies, however, cost significantly more.
- Reimbursement percentage: Pet owners can customize how much reimbursement they receive for covered veterinary costs. Reimbursement amounts can range from 70% to 90%.
- Annual deductible amounts: Pet owners can choose the annual deductible amounts. They can range from $100 to $500. The higher the deductible, the lower the premium amount.
What is a pet insurance deductible?
In a nutshell, a deductible is an amount you pay out of pocket toward your pet's veterinary care.
How do deductibles work?
Pet insurance deductibles give you an idea of how much you'll pay out of pocket if your pet becomes ill or is injured. Here's how it works:
- Let's say you opt for pet insurance coverage with a $500 deductible.
- Once your deductible is met, the pet insurance provider pays 90% of covered expenses (or whatever percentage of the bill is called for in your pet insurance policy).
In real life, it may look like this:
- Your pet tears a ligament and needs emergency surgery.
- The total surgical bill totals $4,500.
- You pay the first $500 to cover your deductible, and the pet insurance company pays 90% of the remaining $4,000 ($3,600).
- You're left with a $400 balance ($4,000 – $3,600 = $400).
- Once you've paid the final $400, the total you're out for the $4,500 surgery is $900.
How expensive is pet insurance?
Wellness coverage typically costs $20-$50 per month and is rolled into comprehensive coverage policies. For most people, the cost of these policies are what they would pay out of pocket anyway, so it may not be worth getting a standalone wellness plan.
According to the North American Pet Health Insurance Association, the average premiums vary based on the type of policy:
Accident only average premiums
