How Does Pet Insurance Work?

Less than 1% of Americans protect their pets with pet insurance. Unfortunately, a variety of factors contribute to low coverage rates. Pet insurance is somewhat confusing and often comes with many restrictions. The average plan costs more money than the average pet owner is willing to pay. Nonetheless, pet insurance plays an important role in keeping cats, dogs, and other pets healthy. An average vet bill costs between $100 and $400, and surgeries can cost thousands more.

Is Pet Insurance Like Health Insurance For Humans?

First, there’s a common misconception about pet insurance. Most consumers believe pet insurance works like health insurance for humans. They believe they submit their insurance to the vet, and the vet processes the claim on its end. That couldn’t be further from the truth, though, and causes quite a few headaches for unaware consumers. Currently, pet insurers consider this form of coverage a type of property insurance, which works on the claim and reimbursement model.

How Pet Insurance Actually Works

All major pet insurance plans require the pet owner to pay out of pocket for covered services first. They’re then able to submit the invoice as a claim and receive reimbursement from their insurance carrier. At signup, pet insurance plans list copay and deductible requirements. The deductible amount must be paid by the pet owner before coverage applies. A copay means that the owner must pay a certain percentage of a vet visit before coverage applies, too.

Every plan includes a waiting period for each type of coverage as well. The waiting period can range between 5 and 21 days for accident or illness coverage. However, issues related to bone and joint health may come with six-month waiting periods. Not all consumers realize the waiting period exists, and this can lead to problems during a potential claim.

Most pet insurance policies in the United States include exclusions for preexisting conditions. Therefore, any disorder or disease the pet suffers from before signup won’t be covered after the waiting period. This is a standard practice in the pet insurance industry, but it’s one of the most criticized aspects of coverage from pet owners. Issues related to preexisting conditions often cost a lot of money yet receive no coverage under pet insurance.

What’s Included and What’s Excluded?

A typical pet insurance policy covers accidents and illnesses. However, they don’t cover wellness and routine visits by default. This means things like annual checkups and vaccinations often receive no coverage. Pet owners need to purchase a wellness add-on plan to receive reimbursement for those situations. Of course, the exclusion for preexisting conditions is impossible to avoid when it comes to pet insurance.

The Claims and Reimbursement Process

Each pet insurance plan requires the pet owner to pay out of pocket first. From there, pet owners submit an electronic or mailed claim form. This simple form requests information from the invoice or treatment. A copy of the invoice must be submitted with the claim as well. Luckily, this particular process doesn’t take too long to handle.

Once the claim is received by the insurance carrier, claims may process within 3-5 business days on average. Some companies take longer to process claims, which means pet owners must be aware of processing times. Not everyone can afford to pay for treatment and wait for reimbursement. In pet insurance, typical reimbursement percentages range from 70% to 90% per claim. Pet insurance allows owners to recoup a significant amount of the treatment cost.

Is Pet Insurance Worth The Cost?

Pet insurance may cost anywhere from $30 to $100 per pet per month. In the end, less than 1% of Americans cover their pets with insurance today. Such coverage can prove vital in taking care of a pet, especially one that’s prone to health issues or regular treatment needs. Most pet owners will benefit from purchasing pet insurance in the long run. It’s important to purchase coverage early to avoid issues with preexisting conditions and other exclusions.