Pet Insurance: Is It Worth the Price?

Pets are members of the family, especially the feline and canine varieties. When they're hungry we feed them and when they're sick we take care of them. And when a medical emergency arises we do what must be done and worry about the bill, which can skyrocket into the thousands of dollars, later. Some dog and cat owners opt for pet insurance to cover such contingencies. But this product, too, comes at a hefty price.

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We queried five pet insurance providers about why cat and dog owners might consider insurance, what they can do to minimize the cost of premiums, and what fine print to watch out for.

The first question owners should ask is whether to buy pet insurance at all. Although pet insurance providers have an obvious bias towards an affirmative answer, they do offer several persuasive reasons why it might be a good idea. For one thing, more than one-third of household pets become sick or injured in the course of a year, noted Laura Bennett, CEO of Embrace Pet Insurance. And, added Jessica Calise, marketing manager at PetPartners, the cost of one emergency vet visit could easily top $1,000. Pet insurance, then, provides a type of security that lets owners make healthcare decisions based on medical necessity rather than what their budget allows, argued Chris and Natasha Ashton, co-founders at Petplan Insurance.

Pet insurance premiums are paid monthly or annually, the latter often offered at a slight discount. The cost varies depending on factors such as type of animal, age, breed, and place of residence, and on the extent of coverage, the size of the deductible, and the percent reimbursed (vet bills are typically paid upfront).

For example, the price of insuring a 6-week-old Maltese mix in New York City through one of the providers we interviewed ranges from nearly $22 a month to $63; the lower rate covers up to $10,000 a year in expenses with a $200 annual deductible and 80 percent reimbursement; the higher rate covers up to $22,000 in annual expenses and miscellaneous outlays -- e.g., $500 towards boarding, $500 to advertise a lost animal and/or pay a reward -- with a $50 deductible and full reimbursement. Another provider charges $15.28 a month for a one-month-old mixed breed male cat (also living in New York City) on a plan that includes a $5,000 annual maximum, a $500 deductible, an 80 percent reimbursement rate, and coverage for prescription drugs; choosing a $200 deductible would push up the monthly fee to $23.51, while wellness coverage would add $14.95 a month.

Related: How to save money at the vet

Upscale plans open the door to coverage for prescriptions, annual checkups, and shots; dental cleaning often can be added for an extra fee, and ditto for coverage of chronic and hereditary conditions (on the order of $50 a month with some providers). Some insurers argue that a full-bore plan that includes hereditary and chronic conditions is a better value than an economy plan with restrictions.

As evidenced by the examples above, the best way to lower the cost of a plan is to accept a higher deductible and lower reimbursement rate. Another alternative is to choose a low-cost plan with minimal coverage. For example, Veterinary Pet Insurance Co. (VPI) features a $10 monthly plan that covers injuries for cats and dogs but not medical conditions; an $11 plan covers the 15 most common cat medical conditions but nothing else.

Spaying or neutering a pet also lowers the cost of pet insurance, as is covering several pets at the same time (the family-plan approach). And if rising premiums become an issue, Dr. Jack Stephens, president of Pets Best Insurance, recommends speaking with the insurance provider before canceling. Most providers don't cover pre-existing illnesses, so trying to switch providers by canceling and then re-signing at a later date with the original carrier can prove even more costly.

Related: Petco vs. Petsmart comparison

Before choosing a pet insurer, it's important to check the fine print. A wellness option may set yearly allowances for certain services, a dental rider may exclude X-rays or crowns, and the deductible may not cover exam fees. Pet owners should carefully scrutinize plan restrictions related to specific breeds, conditions (e.g., cancer), or even animal age. Additionally, some providers don't cover costs for weekend emergencies or specialty vets even though their expertise may be necessary. Adam Fell, a spokesperson for VPI, suggests that owners look for plans with an annual deductible rather than one that imposes a deductible for each incident. Dr. Stephens also urges owners to shop for an insurance company that reimburses based on the vet's actual bill rather than a benefit schedule or a UCR (usual, customary, and reasonable), which both pay a pre-determined amount. He also advises owners to inquire about how quickly insurance companies pay claims.

Bottom line: As with any type of insurance, tolerance for risk has a big impact on decisions about coverage. Cost plays a role, too, and pet owners need to weigh what they can afford emotionally and financially.

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