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Is Pet Insurance Worth The Cost? What Does It Actually Cover?

Pet insurance coverage and buying tips
Pet health insurance can save pet owners thousands of dollars in veterinary bills, but only if the claim is not denied. Buried in the fine print of many policies are preexisting condition exclusions and annual exam requirements, the scope of which leave many pet owners unreimbursed and infuriated.
These tips are designed to help you understand what is and is not covered in a given policy, so that you can make an informed decision – is pet insurance right for me and my particular pets? And if so, how do I find the best plan for my pet's potential needs?

Pet Insurance Case Study: The Good, The Bad and The Ugly

The story of Zephyr illustrates the advantages and shortfalls of pet insurance coverage. 

Zephyr was a six month old puppy and a show dog prospect, when she caught her toe in a screen door and broke one of the delicate bones in her foot. To ensure the foot healed correctly, and prevent a career ending limp, her vet recommended a costly surgery to place a pin in her foot.
The surgery cost $2,400 in 2009. Fortunately, her owner had pet health insurance, which covered all but a $50.00 deductible. A year and a half later, Zephyr went on to become one of the top winning show dogs of her breed. Then, during a routine screening, she was diagnosed with hip dysplasia. Her owner then learned that, because hip dysplasia was common in her breed, any complications which might arise from the hip dysplasia would not be covered by her particular insurance policy…
With many policies, breeds with a high prevalence of any disorder may be excluded from coverage based simply on the fact that their breed has a high rate of occurrence of a specific malady. Breeds with high rates of cancer, Cushings disease or Addison's Disease may be excluded from coverage for treatment if the insurance company has listed them as preexisting conditions for your breed.

The hidden exclusions in pet insurance

Why Buy Pet Health Insurance

Approximately 1 million pets in the USA are covered by health insurance. That equates to 3% or dogs and 1% of cats, a relatively small percentage of pets. It is important to note that studies have shown that over the lifetime of the average healthy pet, pet insurance premiums cost more than they reimburse for routine illnesses and annual medical checkups.
Pet health insurance is designed to help soften the financial burden of catastrophic illness and injuries, and prevent “economic euthanasia.” Cancer, automobile accidents, crutiate ligament tears and chronic diseases such as renal failure and can easily cost between $3,500 to $10,000 in veterinary expenses.
Many families cannot support these extreme fees for even the most beloved family pet. The right health insurance plan can help you share those costs with your pet insurance company.
It is important to note that studies have shown that over the lifetime of the average healthy pet, pet insurance premiums cost more than they reimburse for routine illnesses and annual medical checkups.

The Basic Coverage You Need In A Pet Insurance Policy

There are three different types of plans to choose from: accident only, accident and illness and accident, illness and wellness.
  • Only the wellness plans will cover your vet exams. Even if your exam is part of a treatment for an accident or major illness, that portion of your invoice will be removed from the total bill to be reimbursed. However, the additional premiums paid for wellness plans cost the pet owner more than they actually reimburse. We recommend that you select a plan that covers both injuries and illnesses, but not wellness.
  • Some plans reimburse as a percentage of actual fees charged, called a “percentage reimbursement plan”, while others reimburse on a set fee schedule based on the average price per procedure in your area, the “reasonable costs plan.” Choose a percentage reimbursement plan that pays a percent of your actual bill.
  • The higher the deductible the lower your premium. Deductibles are not met annually as with human policies, but occur per injury or illness. So if your pet has an injury and two different illnesses over the course of a year, you will pay 3 separate deductibles. To keep down premium costs, select the highest deductible that you would feel comfortable paying twice a year. Keep in mind that you will still pay for exam fees, preventatives and vaccinations as well as a percentage of the total bill.
  • Some pet health policies limit coverage for an illness to the year in which it initiated. Then, when the policy renews, it becomes a pre-existing condition that is now excluded from coverage. Other policies will cap the amount to be paid per illness. Select a policy with no lifetime limits and continual coverage for chronic diseases.
Choose a policy that covers both acute and chronic illness
Kidney disease is a common chronic disease in cats, choose a continual coverage plan
 to manage both the acute and chronic renal illnesses.

Understanding Preexisting Conditions and Exclusions

Preexisting conditions are conditions that have been diagnosed or suspected prior to enrollment and the policy waiting period. Most policies have a 24 hour accident waiting period and a 14-30 day illness waiting period, before coverage actually begins.
Bilateral preexisting conditions are not covered. For example, a crutiate tear (ACL injury) in one knee creates a preexisting condition for the other knee as well. Once one side is affected, the other will be excluded as well.
Policies without hereditary or congenital defect coverage can exclude a vast array of illnesses. Under this exclusion hip dysplasia, developmental abnormalities, heart defect or common breed specific illnesses may not be covered.
Policies without breed specific or species specific illness coverage can exclude a wide range of diseases. For example specific cancers are prevalent in golden retrievers. German Shepherds are notorious for high rates of hip dysplasia. (see the next section on underwriting reports).
Generally preventatives are not covered. Preventatives typically include flea and tick, heartworm or even motion sickness preventatives for dogs with inner ear problems.
Unless you have a wellness plan, dental cleanings will not be covered. However, dental injuries and endodontics may be covered. Typically, endodontics are only covered up to the amount that would be the equivalent cost of an extraction.
Some plans require an annual checkup at your vet to remain in effect. On these plans, if you go beyond 12 moths without seeing a vet, they will refuse to pay your next claim. They will of course keep your premium.

The Plan You Choose Must Include Coverage for the Following Conditions:

  • Cancer (some plans offer alternative and holistic treatment coverage for an additional fee)
  • Hereditary and Congenital Conditions (such as heart defect, osteochondrosis or hip dysplasia)
  • Chronic Diseases (such as kidney disease, diabetes, Addison’s and Cushing’s disease)
  • Continual Coverage for Chronic Diseases (coverage for each illness that will last for the lifetime of your pet)
  • Medical Conditions Common to Your Pet’s Breed (some unscrupulous insurance claims departments will include certain cancers or a chronic diseases in your policies exclusions if that disease is common to your breed).

Protect Your Self from Unscrupulous Insurers

Before you buy a policy, get an underwriting report for preexisting conditions. This is especially important if you are trying to insure a newly acquired older pet or rescue with no veterinary history available.
Before signing up for a policy, you can request from each insurance company’s underwriting department a list of preexisting conditions that would qualify as exclusions to your pet, based on his medical history, breed and species.
Getting this list from underwriting can take up to 30 days, but it is well worth the wait.
This list will let you know what you can be sure will not be covered. Additionally, it may provide you with protection should a claim be rejected at a later date for a preexisting condition that was not on your list. Store your pet's list of preexisting exclusions in a safe place!

The Best Pet Insurance Value

Consumer Reports studied 9 pet insurance plans by comparing their expected premiums and payouts on two real cat's veterinary histories.
Of the nine plans reviewed 24PetCare QuickWatch Gold and VPI paid out the least relative to the premiums charged. A customer using one of these plans would have lost between $800-$1900 in excess premiums paid.
Trupanion Pet Insurance would have paid out the most with either its 70% or 90% percentage reimbursement plan. The Trupanion pet insurance plan also meets our coverage requirements with no lifetime limit on coverage, and coverage for breed specific, hereditary and congenital diseases as well as continual chronic disease coverage.

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