It’s estimated that 66% of American households have at least one pet in the family. If yours is one of them, then you know how much joy furry family members can bring. But — like the rest of the family — pets also have health needs, which are sometimes quite costly.
When it comes to taking care of your pets, is pet insurance worth it? Well, money expert Clark Howard says, “Pet insurance is a really messy area.” In this article, we’ll look at Clark’s reasons why and things he says you should consider instead.
We’ll also answer frequently asked questions about pet insurance, including:
- What Is Pet Insurance?
- Clark Howard’s Thoughts on Pet Insurance
- 4 Things To Know Before You Get Pet Insurance
- Who Offers Pet Insurance?
What Is Pet Insurance?
A pet insurance policy is a form of health insurance specifically for pets. Typically, pet insurance policies are for dogs and cats. But if you have a different type of pet, you might be able to find coverage with a select group of insurers.
Pet insurance works similarly to every other type of insurance. For example — as with homeowners insurance or car insurance — you’ll have premiums, deductibles, inclusions, and exclusions as part of your policy agreement. There’s also an annual maximum coverage, which is a coverage limit, or maximum amount your insurer will pay, per year.
But there are a couple of things that’re slightly different in the world of pet insurance, including how your insurer pays for services and the types of coverage available. Keep reading to learn more.
How Does Pet Insurance Work?
When you buy a pet insurance policy, you agree to pay a company in exchange for financial compensation on covered expenses. In other words, you agree to pay a monthly or annual premium. And if your pet needs medical attention, your insurer will cover an agreed-upon portion of any services that are covered.
When the time comes to use your coverage, there’s a good chance your policy will have what’s known as a reimbursement percentage. Many pet insurance companies require policyholders to pay for services with a veterinarian upfront. Then, the insurer reimburses the policyholder up to a certain percentage — the policy’s reimbursement percentage — for services.
Let’s say you purchase a pet insurance policy with a reimbursement percentage of 80% for covered services. Now, imagine you take your dog to the vet for a covered service that costs $200. You will pay your vet $200 for the service, and then file an insurance claim. After the claim is approved, the maximum amount your insurer will reimburse you is $160, or 80% of the service. Of course, this is assuming you’ve already met any applicable policy deductible.
It might seem daunting to know you’ll need to pay your pet’s medical expenses up front, despite having insurance. If so, there are other options to consider! For one, some insurers partner with and pay veterinarians directly. In this scenario, your vet should only bill you for any uncovered costs for services. Let’s consider the example from above again: You have a policy with an 80% reimbursement percentage and take your dog for a $200 service. Your vet will only bill you for $40, or the 20% your insurer isn’t responsible for reimbursing.
What Are the Three Types of Pet Insurance?
When it comes to protection for your pets, insurance companies often offer three types of coverage, including:
- Accident-only: provides financial compensation only if your pet sustains an injury from an accidental event
- Accident and Illness: provides financial compensation if your pet sustains injury from an accidental event or if your pet needs medical attention for illnesses and/or diseases
- Wellness: provides financial compensation for routine treatments and/or preventative care
Each type of coverage has inclusions and exclusions. The list of what’s covered or not can vary from company to company. So, if you’re going to get pet insurance be sure to ask about what services and events are covered before you enroll. And check out what else is on our list of things to know before you get pet insurance below.
Clark Howard’s Thoughts on Pet Insurance
“Pet insurance brochures look fantastic; in real life, not so much,” Clark warns. The consumer champ knows this opinion isn’t always popular with pet owners — and might lead to more feedback on Clark Stinks — but here’s a key reason for his stance:
“Pet insurance is like Swiss cheese: with a bunch of holes in it … It often doesn’t make sense when you consider the typical coverages versus the exclusions.”
Clark wants you to pay special attention to breed exclusions if you’re seriously considering pet insurance. Otherwise, you risk paying for coverage that you can’t use because your animal’s breed is blacklisted or their known ailments aren’t covered.
“Insurance sellers know, ‘Oh that breed — if it’s a purebred — has all these things that happen.’ And they’ll exclude this, exclude that, exclude the other,” he says.
If you’re going to buy pet insurance, Clark recommends that you talk with your vet before purchasing a policy. You want to make sure you get the best coverage you can afford with the least amount of loopholes. And since vets help as intermediaries with claims, they should have good insight on worthwhile options.
“Ask your veterinarian which policy they find does the best job for their customers at their vet practice. Because the pet insurance industry is one that overpromises and underdelivers. And the vets know which ones rip people off, and which ones actually seem to do a good job.”
Clark’s Preferred Alternative to Pet Insurance: A Pet Emergency Fund
Clark’s long-recommended alternative to traditional pet insurance is simple: Set up a pet emergency fund.
Here’s how it works: You just put what you would pay for pet insurance into a savings account for future use. This account will grow with time. And when the time comes to take care of your pet, you will have access to the funds without any exclusions!
You can set a goal amount for your pet emergency fund. Once you reach the goal, you no longer need to put money aside unless you’re replenishing funds that you’ve dipped into for veterinary services.
And here’s a bonus money-saving tip from Clark: You might be able to save money on veterinary services if you live near a vet school. He says:
“Vet schools — I mean any kind of school where they’re supervised by an instructor and you have the students learning — that is a great way potentially to save money.”
4 Things To Know Before You Get Pet Insurance
When it comes to peace of mind about taking care of our furry family members, pet insurance isn’t our first choice here at Team Clark. But, that doesn’t mean pet insurance isn’t worth it for you. If you’re going to buy it, here are four things to keep in mind before you do:
1. You’ll need funds upfront.
Be sure to read the fine print of your policy. There are lots of different costs you’ll be responsible for, which can add up quickly. First, you’ve got your monthly or annual premium to pay. Second, your insurer typically won’t cover the costs of services until you’ve met your deductible. While a higher deductible will lower your premium, it also means more money out of your pockets up front.
You should also be prepared to pay your veterinarian up front for any services. As mentioned above, most pet insurance companies reimburse policyholders after a claim is filed for a completed service. And even then, the reimbursement is only a percentage of the costs. Typically, the percentage is less than 100%.
Finally, your policy might have an annual maximum. If so, your insurer will only reimburse you for services until you reach that limit. Then, you’re on your own for the rest of the year.
2. Your policy will have exclusions.
The worst thing you can do is pay for a pet insurance policy that won’t cover any of your pet’s medical needs. When it comes to pet insurance inclusion, here are a few things to keep in mind:
Chronic diseases generally aren’t covered, and insurers often won’t pay for known defects among certain breeds. And, of course, insurers won’t cover pre-existing conditions. Your policy might also have a maximum limit for the treatment of individual illnesses.
Some insurers might require your pet’s medical records or an exam before agreeing to take you on as a customer. And many companies enforce waiting periods before certain coverages kick in. These waiting periods can range from just two days to six months or longer, depending on the accident, illness, or event.
3. Discounts and add-ons might not be worth it.
Pet insurance companies might try to make coverage more appealing by offering discounts or add-on coverages. For example, I’ve seen discounts for things like having coverage for multiple pets or having pets that are spayed/neutered. And — in addition to accident-only or accident and illness coverages — many insurers offer wellness plans.
On paper, these options might seem like they’ll save you money down the line. But depending on your pets (breed, age, lifestyle, etc.), you might not actually save with the discounts. And if you add a wellness plan to your main coverage, you’ll still be responsible for covering at least a portion of the costs for services you use. Plus, there might be other included services that you’re simply not interested in.
4. Your rate will increase over time.
Here’s another thing pet insurance has in common with car insurance and homeowners insurance: Your rate will go up with time. Pet insurers raise rates based on the age of your pet. With each year, you can expect to pay more for coverage. Your rates will also increase to keep up with rising costs of veterinary services (inflation) and the types of treatment that are potentially available for illnesses.
Who Offers Pet Insurance?
There are quite a few companies that offer pet insurance. Some companies focus solely on the pet insurance market. Others are major insurers that sell pet insurance along with additional lines of coverage like auto, home and/or life insurance.
When it comes to insurance, we trust Consumer Reports to provide insight on how companies perform with their members. Currently, there are eight companies that Consumer Reports has evaluated and scored. These companies include:
When it comes to pet insurance company scores, Consumer Reports considers “member ratings of policy price, coverage, reimbursement options, choice of maximum annual limits and more.” You’ll need a subscription to read their full reviews of each company. But spoiler alert: It doesn’t look great. Companies are graded on a scale from 1-100. This year, the highest score is 55 and the lowest is 35.
But you can read a bit more about each company and a few others below.
ASPCA® Pet Health Insurance has lots of coverage options for dogs and cats. In addition to accident-only coverage, the company has a Complete Coverage plan, which they say includes:
- Alternative therapies
- Behavior issues
- Dental disease
- Hereditary conditions
The company also advertises, “up to 90% cash back” as a reimbursement percentage option. You can look at sample plans and read answers to FAQs about ASPCA ® plans here.
According to their website, Banfield Pet Hospital® is an organization that includes more than 1,000 hospitals and 3,600 veterinarians across the United States and Puerto Rico. But the company doesn’t actually sell pet insurance. Instead, they offer Optimum Wellness Plans®, or OWPs. Here’s how the company says what they offer is different:
“With insurance, you pay a premium and hope your pet’s services are reimbursed. With an OWP, you pay in monthly or yearly installments for a package of preventive care services like vaccines, physical exams, and more.”
You can choose an OWP for dogs, puppies, cats and/or kittens. Want to learn more? Check out the Optimum Wellness Plans® FAQs here.
Embrace Pet Insurance offers a wide range of coverage for cats and dogs. In fact, the company says: “We cover pretty much everything, except pre-existing conditions.” This includes:
- Breed specific conditions
- Chronic conditions
- Congenital and genetic conditions
- Dental illnesses
- Orthopedic conditions
- Preventable conditions
With Embrace, you’ll also get access to a 24/7 pet helpline. If you want to know what else is included or excluded, you can read about Embrace Pet Insurance coverage here.
Fetch offers a single, comprehensive pet insurance plan to their policyholders. The company states this eliminates “confusing choices” since “everything is included by default.” But, they also acknowledge that this means there’s a chance your premium will be higher with them than other companies. Fetch has a nifty feature on their site that allows you to compare their coverages with the offerings of other pet insurance companies, including most on this list.
Healthy Paws® Pet Insurance and Foundation provides pet insurance for cats and dogs. Their offerings cover, “accidents, illnesses, cancer, emergency care, genetic and hereditary conditions, breed-specific conditions, and alternative care.”
The company says they don’t have a maximum limit for policyholders. This makes Healthy Paws® worth considering if you’re looking for coverage without caps on how much you can be reimbursed per event or year.
You can compare Healthy Paws® to many other companies using the Compare function on their website. And you can learn all about their coverages, claims handling and more by reading the Healthy Paws® FAQs section here.
Nationwide Pet Insurance
- Ferrets and small mammals
- Guinea pigs
- Lizards, reptiles and frogs
- Mini pigs and goats
Your coverage options will vary, depending on the kind of pet you’re insuring. But when it comes to cats and dogs, you’ll find their options align with the standard of accidents, illnesses and wellness coverage. You can learn more about Nationwide’s pet insurance offerings here.
Pets Best Pet Health Insurance offers “comprehensive pet insurance plans” for kittens, puppies, cats and dogs. As is typical with pet insurance, their offerings include coverage for accidents, illnesses and routine care (wellness).
Their accident and illness plans are known as BestBenefit plans. With a BestBenefit plan, you can get coverage for things ranging from hereditary and congenital conditions to prosthetic devices, wheelchairs, behavioral conditions, and more.
The company also offers a 24/7 pet helpline to its members. Take a look at what Pets Best pet insurance covers here.
Trupanion™ is one of the most well-known pet insurance companies around. And while they offer the same standard coverages as every other company on this list, Trupanion™ handles payment for services differently.
With Trupanion™, policyholders have access to Vet Direct Pay™. The company says, “We’re the world’s first (and only!) pet insurance provider to offer direct payment at checkout.” But I’ve found another company that says they offer direct pay; you can read a bit about them below. Still, with Vet Direct Pay™, Trupanion™ handles your vet bills at the time of service.
Additionally, the company advertises no maximum coverage limits for policyholders. Want to know what else Trupanion™ has to offer? Check out the Trupanion™ FAQs page here.
Other Companies To Consider
The eight companies above have been reviewed by Consumer Reports. But there are several other companies that sell pet insurance policies. If you’re interested in buying one, check with your auto or homeowners insurance company to see if they offer anything.
You may even get a deal on pet insurance by buying coverage through Costco. The wholesaler offers its members pet insurance that’s underwritten by Figo Pet Insurance. So — like with their home and auto insurance — it’s important to know that you won’t be dealing with Costco if you buy coverage through them. You’ll go through Figo for any claims or pet insurance needs.
If you’re a fan of shopping online with Chewy for your pet’s needs, you might be happy to know the company has an insurance offering called CarePlus by Chewy. Chewy says you can get your vet bills paid directly to your vet within minutes of service, so Trupanion™ isn’t the only company to offer this benefit. And plans with Chewy have no maximum coverage limits.
Just remember, no matter the company: Be sure to read the fine print of any policy you’re considering carefully! You don’t want to pay for protection that you can’t use.
The idea of pet insurance might be comforting, but the coverage isn’t always worth it. If you’re going to buy a policy though, be sure you fully understand what you’re getting. Get your vet’s opinion on any company you’re considering, and be sure to carefully review any policy exclusions.
And if you’re going to get pet insurance, definitely don’t wait until you need it! In addition to mandatory waiting periods, pet insurance companies do not cover pre-existing conditions. So — if you’ve got a breed known to have specific medical issues — your best bet for protection is to get coverage while your pet is young and healthy.
Otherwise, it’s always a great idea to have your own emergency fund. This gives you complete control of when, where and (most importantly) on what you choose to use your money. It’s like pet insurance without any exclusions.