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Pets provide us with companionship, unconditional love, and endless entertainment. As pet owners, we want to ensure that our furry, feathered, or scaly companions receive the best possible care, but unexpected accidents or illnesses can quickly lead to expensive, unexpected veterinary bills. This is where pet insurance comes in, providing pet owners with financial protection and peace of mind in case of unexpected medical expenses. However, with so many different pet insurance options available, it can be challenging to determine which one is the best fit for you and your best friend. Let's explore what pet insurance is and what factors to consider when choosing a plan so that you can make the choice that's best for both you and your pet.

The Growth of Pet Insurance

Claes Virgin, the founder of Länsförsäkrings Alliance, a Swedish insurance company still in operation today, authored the first policy in 1890. Initially, the policies covered horses and livestock. However, the concept of pet insurance that we recognize today, emerged in Sweden in 1924 when a policy was developed for dogs. In 1947, Veterinary Benefit Ltd, (later known as Petplan) issued the first pet insurance policy in Britain. Veterinary Pet Insurance (VPI) introduced pet insurance to America in 1982. The first recipient? Lassie: the iconic collie of TV and movie fame.

Since the days of Lassie, statistics surrounding pet insurance have proved staggering. In 2018, the market size was valued at USD 6.05 billion, and it is expected to grow to USD 11.25 billion by 2026 representing a compound annual growth rate of 8%. The latest statistics show there were approximately 88 million dogs and 66 million cats in the United States. However, pet insurance covers only 4 million pets (dogs + cats), a fraction of the potential number. This may be attributable to consumer ignorance about the cost and effectiveness of pet policies. Moreover, people commonly underestimate the large vet bills that will inevitably come with pet ownership.

Veterinary bills have increased significantly. In 2010, veterinary care accounted for $13 billion in spending. By 2021, that amount had soared to over $34 billion according to the American Pet Products Association (APPA).

Why Have Vet Bills Risen Dramatically?

Veterinary bills have risen for several reasons, including:

  • Increasing Cost of Equipment and Supplies: The cost of medical equipment and supplies, such as x-ray machines, lab equipment, and medications, has increased significantly over the years, which in turn has increased the cost of providing veterinary care.
  • Technological Advancements: Veterinarians are now able to offer more advanced and specialized treatments (MRIs) and procedures. However, these treatments and procedures come with a higher cost due to the use of specialized equipment and training required to perform them.
  • Increased Demand for Veterinary Services: As pet ownership has increased and pet owners are willing to spend more on their pets' health, the demand for veterinary services has also increased. This demand has put pressure on veterinarians to increase their fees to cover the costs of providing quality care.
  • Rising Operating Costs: Running a veterinary practice can be expensive, with costs associated with rent, utilities, insurance, and staff salaries. These costs have also contributed to the rise in veterinary bills.
  • Veterinary Education Debt: The cost of veterinary education has increased over the years, and many veterinarians graduate with significant student loan debt. This debt can increase the pressure to charge higher fees to cover their expenses.

Overall, the rise in veterinary bills reflects the increasing costs associated with providing high-quality veterinary care, as well as the growing demand for these services.

Is Pet Health Insurance Regulated?

Currently only California and Maine have enacted legislation to govern pet insurance. In 2022, the National Association of Insurance Commissioners (NAIC) passed the Pet Insurance Model Act which is a set of guidelines and regulations for pet insurance providers in the United States. The act aims to promote transparency and accountability in the pet insurance industry by requiring providers to disclose important information to consumers, such as coverage limitations, exclusions, and waiting periods. Additionally, the act sets standards for advertising and marketing practices, establishes procedures for resolving consumer complaints, and requires pet insurance providers to maintain sufficient financial resources to pay out claims. Overall, the Pet Insurance Model Act is intended to protect pet owners and ensure that they have access to fair and reliable pet insurance coverage.

Keep in mind that a model act itself does not have legal weight because it is not a law. Rather, a model act is a non-binding guideline developed by an organization to provide recommendations and best practices for lawmakers to consider when drafting their own legislation.

Some states may choose to adopt a model act in whole or in part as their own law, which can give the model act legal weight within that jurisdiction. However, the extent to which a model act is adopted and the legal weight it carries will depend on the specific laws and regulations of the state.

Types of Pet Insurance Health Policies

Pet insurance companies typically offer these types of policies:

  1. Accident-Only Coverage: Broken bones, burns, and cuts. It does not cover illnesses or other non-accident-related conditions.
  2. Illness Coverage: Treatment for illnesses such as cancer, allergies, and infections. It may also cover the costs of diagnostic tests, prescription medications, and other related expenses.
  3. Wellness Coverage: Routine or preventive care, such as annual checkups, vaccinations, and dental cleanings. It is usually offered as an add-on to accident and illness coverage.
  4. Comprehensive Coverage: The most inclusive and covers both accidents and illnesses, as well as routine and preventive care. It may also cover alternative therapies, rehabilitation, and other specialized treatments.
  5. Lifetime Coverage: This type of pet insurance policy provides coverage for the entire lifetime of the pet, as long as the policy is kept in good standing. This means that even chronic conditions or long-term illnesses that develop later in life will be covered.

Each of these types of pet insurance policies has its own benefits, limitations, and deductibles. The policy that is best for a particular pet will depend on factors such as the pet's age, breed, health history, and lifestyle. Pet owners should carefully consider their pet's needs and their own budget when selecting a pet insurance policy.

Questions to Ask an Insurance Provider

The California Department of Insurance suggests that pet owners pose the following questions to potential pet insurance providers:

  • "Does the coverage offered have an exclusion for pre-existing conditions? If so, the insurer will likely not pay for treatment for any condition for which the pet owner has received medical advice or the pet has received treatment prior to enrollment in a new pet insurance policy.
  • Is there a waiting or affiliation period, which means the period of time specified in a pet insurance policy that must pass before some or all of the coverage in the policy can begin? If so, any costs for treatment provided before the end of the waiting period will not be covered by the policy.
  • Does the coverage exclude costs for treatment of a hereditary disorder, which means an abnormality that is genetically transmitted from parent to offspring and may cause illness or disease? If your pet has a hereditary disorder, such as hip dysplasia, the insurer will not pay for treatment related to that disorder.
  • Does the coverage exclude costs for a congenital anomaly or disorder, which means a condition that is present from birth, whether inherited or caused by the environment and which may cause or otherwise contribute to illness or disease? If your pet has a health issue identified as a congenital anomaly or disorder the insurer will not pay for treatment related to that disorder.
  • Is there a deductible or coinsurance clause that causes any claim reimbursement to be reduced by a set amount? Your veterinarian will expect you to pay the amount of any deductible or coinsurance percentage.
  • Is there an annual or lifetime policy limit that will cap the amount that will be paid for veterinary services? If so, you need to consider whether the coverage is a reasonable investment in terms of premium paid versus total benefit available.
  • Will the renewal premium be increased if a claim is made? If so, you might want to know what is the amount of increase that takes place.
  • Is there a basis for reimbursement or formula for payment for veterinary services other than the actual amount of the billed services? Examples include claims payments based upon a standardized schedule of costs or a schedule of "usual and customary" charges in the industry for the services provided. Your veterinarian will expect you to pay the balance of any billed amount not paid by the insurer."

Other Considerations:

  • Premiums: Pet insurance premiums can vary widely depending on the coverage you choose, the breed of your pet, and other factors. It's important to shop around and compare policies and premiums before deciding.
  • Claims process: Understand the process for making a claim, including any paperwork that may be required, how long it takes to process a claim, and how payments are made.
  • Provider network: Some pet insurance policies may have a provider network that you must use to receive coverage. It's important to understand which veterinarians are in the network and whether you're comfortable using those providers.
  • Reputation: Consider the company's customer service record, financial stability, and overall reputation. Check online reviews and ratings to ensure that you're dealing with a reputable provider.
  • Employer: A recent survey showed that 47% of companies offer pet insurance as a benefit. Check with your employer to see if it's part of your package.

Overall, it's important to obtain several pet insurance quotes. Carefully review any pet insurance policy before purchasing it to ensure that you understand the coverage and any limitations or exclusions.

How Much Does Pet Insurance Cost?

Of course, the answer is: That depends. Pet insurance premiums can range from a few hundred dollars per year to several thousand. Premiums vary based on the type and amount of coverage purchased, the age and breed of the pet, and any discounts that may apply. Pet owners should also consider other expenses such as deductibles, copayments, coinsurance, or other out-of-pocket costs that may apply.

According to the North America Pet Health Insurance Association (NAPHIA), the average monthly premium in 2022 for an Accident and Illness Policy was $48.66 per month for a dog and $28.57 for a cat. Accident Only Premiums were $19.93 and $10.85 for dogs and cats respectively. Keep in mind that these are just averages; your own costs may be higher or lower depending on the coverage you choose and other factors.

When selecting a pet insurance plan, it's important to consider the full cost of coverage and not just the premium. It's also wise to compare policies from different insurers. Doing so can help you find the most comprehensive coverage at an affordable price.

Deciding if Pet Insurance is Right for You

Pet insurance plans can be a great way to help protect your furry family members from the unexpected. Knowing that costly vet bills will mount during a pet's lifetime, owners can mitigate the financial burden by purchasing pet insurance. However, pet insurance is not right for everyone so it's important to consider the cost, coverage options, and other factors before making a decision. If you have sufficient financial means to cover the cost of vet care, you may not need pet insurance.

If you're concerned about veterinary costs and want to be prepared for any emergencies that might arise, then pet insurance could be a good option. Ultimately, if you feel that the coverage is appropriate for your family and your budget, pet insurance can be an excellent way to ensure that your furry friends get the best care without breaking the bank.

Heirloom Safe provides you with a simple, secure way to store your pet's profile and to designate who you want to care for your best friend when you can't. Create an Heirloom Safe account today to protect the future of the pet you love.


American Pet Products Association: Pet Industry Market Size, Trends & Ownership Statistics

American Veterinary Medical Association: 2022 AVMA Pet Ownership and Demographics Sourcebook

California Department of Insurance: Questions to Consider When Purchasing Pet Insurance

Fortune Business Insights: Pet Insurance Market Size, Share & Industry Analysis

National Association of Insurance Commissioners: Pet Insurance Model Act

North American Pet Health Insurance Association: Average Premiums

Veterinary Practice News: Vet Care Spending Tops $13 Billion In 2010

VIN News Service: State regulators call for consistent pet insurance rules

Willis Towers Watson: Growth seen in critical illness, identity theft and pet insurance benefits

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