Pet insurance pays the veterinary costs if one’s pet becomes ill or is injured in an accident. Some policies will also pay out when the pet dies, or if it’s lost or stolen.
The purpose of pet insurance is to mitigate the risk of incurring significant expense to treat ill or injured pets. As veterinary medicine is increasingly employing expensive medical techniques and drugs, and owners have higher expectations for their pets’ health care and standard of living than previously, the market for pet insurance has increased.
The first pet insurance policy was written in 1890 by Claes Virgin. Virgin was the founder of Länsförsäkrings Alliance, at that time he focused on horses and livestock. In 1947 the first pet insurance policy was sold in Britain. As of 2009, Britain has the second-highest level of pet insurance in the world (23%), behind only Sweden. In 1982, the first pet insurance policy was sold in the United States, and issued to television’s Lassie by Veterinary Pet Insurance (VPI).
How policies work
Many pet owners believe pet insurance is a variation of human health insurance; however, pet insurance is actually a form of property insurance. As such, pet insurance reimburses the owner after the pet has received care and the owner submits a claim to the insurance company.
British policies usually pay 100% of vets fees, but this is certainly not always the case. It is typically more common to find UK pet insurance companies discounting their policies by offering their customers the chance to pay an excess fee, just like with motor insurance. Excess fees can range from £40 to £100. The excess is usually fixed by the insurer dependent on the amount of discount they are giving the buyer. In the future more flexible excess levels will probably play an important part of how much one pays for a pet insurance policy.
Policies in the United States and Canada either pay off a benefit schedule or pay a percentage of the vet costs (up to 90%), after reaching a deductible, depending on the company and the specific policy. The owner usually pays the amount due to the veterinarian and then sends in the claim form and receives reimbursement, which some companies and policies limit according to their own schedules of necessary and usual charges. For very high bills, some veterinarians allow the owner to put off payment until the insurance claim is processed . Some insurers pay veterinarians directly on behalf of customers. Most American and Canadian policies require the pet owner to submit a request for fees incurred.
Previously, most pet insurance plans did not pay for preventative care (such as vaccinations) or elective procedures (such as neutering). Recently, however, some companies in Canada, the United Kingdom, and the United States are offering routine-care coverage, sometimes called comprehensive coverage. Dental care, prescription drugs and alternative treatments, such as physiotherapy and acupuncture, are also covered by some providers.
There are two categories of insurance policies for pets: non-lifetime and lifetime. The first covers buyers for most conditions suffered by their pet during the course of a policy year but, on renewal in a following year, a condition that has been claimed for will be excluded. If that condition needs further treatment the pet owner will have to pay for that himself. The second category covers a pet for ongoing conditions throughout the pet’s lifetime so that, if a condition is claimed for in the first year, it will not be excluded in subsequent years. However, lifetime policies also have limits: some have limits “per condition”, others have limits “per condition, per year”, and others have limits “per year”, all of which have different implications for a pet owner whose pet needs treatment year after year, so it is wise to be clear which type of lifetime policy you are considering.
In addition, companies often limit coverage for pre-existing conditions in order to eliminate fraudulent consumers, thus giving owners an incentive to insure even very young animals, who are not expected to incur high veterinary costs while they are still healthy. There is usually a short period after a pet insurance policy is bought when the holder will be unable to claim for sickness, often no more than 14 days from inception. This is to cover illnesses contracted before the pet was covered but whose symptoms appeared only after coverage has begun.
Some insurers offer options not directly related to pet health, including covering boarding costs for animals whose owners are hospitalized, or costs (such as rewards or posters) associated with retrieving lost animals. Some policies also include travel cancellation coverage if owners must remain with pets who need urgent treatment or are dying.
Some British policies for dogs also include third-party liability insurance. Thus, for example, if a dog causes a car accident that damages a vehicle, the insurer will pay to rectify the damage for which the owner is responsible under the Animals Act 1971.
The difference between companies
Many pet insurance companies are beginning to offer the pet owner more of an ability to customize their coverage by allowing them to choose their own level of deductible or co-insurance. This allows the pet owner to control their monthly premium and choose the level of coverage that suits them the best.
The smart consumer will always check the details before signing up for a policy which may not cover your animal’s condition. Some companies will use a benefit schedule which shows how much reimbursement is available toward each condition or procedure. Other companies will only cover a certain percentage of the veterinary bill up to what they deem to be a usual and customary amount within a geographic area. And others will not cover hereditary conditions. Finally, some companies will not renew your policy at the end of a given term or will consider a condition pre-existing after renewing your yearly contract and then refuse to cover the illness. Despite these set-backs, pet insurance can provide financial support enabling the dedicated pet owner to not factor in economic considerations while life-saving care is needed.
- ‘Benefit schedule’ – a document created by a pet insurance company that lists allowances paid for a given diagnosis and treatment.
- ‘Deductible’ – a fixed amount that must be paid by the policy holder for covered veterinary services before the pet insurance company will pay benefits. Higher deductibles usually translate to lower policy premiums. Deductibles are either annual or per-incident. Once a pet owner reaches the annual deductible limit, any future claims during that policy year won’t be subject to anymore deductible. The per-incident deductible must be paid each time the pet is presented with a new problem.
- ‘Exclusion’ – a condition that is excluded, or not covered under a pet insurance policy.
- ‘Policy Limits’ – there can be several types of policy limits applied to a pet insurance policy. When a policy limit is reached the policy will normally no longer pay applicable claims. Typical policy limits are lifetime, annual and per-incident.
- ‘Pre-certification’ – when a pet owner to submits a requested treatment to their pet insurance company to see if the treatment will be covered, and at what benefit level.
- ‘Pre-existing condition’ – an injury or illness that occurred before the pet insurance policy became effective. Some pre-existing conditions are eligible for coverage after being cured and a specified period of time elapses. Other conditions cannot ever be covered regardless of time elapsed.
- ‘Coinsurance’ – also referred to as ‘copay’ – the percentage of your claim for which you are liable before any applicable deductible is applied. However, when figuring reimbursements, some companies subtract the deductible before subtracting the copay. Generally, it is preferable to select a lower copay since it is a percentage of the total bill, whereas the deductible is a fixed, known amount.