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Murray Brown

Pet insurance is near and dear to my heart.

If you’ve read any of my articles, I hope that you’ve learned something about insurance. It’s a contract by which someone (or something), called the insured, is protected from a particular financial harm by transferring the risk of it to an insurance company. In return, the insured pays money, called a premium. The amount of the premium depends on the risk that the insurance company takes on. There are lots of variations of insurance, but that’s what it boils down to.

About Pet Insurance and Human Insurance

What you may not know is that there is insurance designed for pets. Pet insurance aims to accomplish about the same thing as “human” insurance, although in a slightly different way. The question for you is whether you think it is worth the cost. If you are a pet lover like me (presently, 14 dogs, 2 tortoises and a few fish), it may be.

Here’s a quick review of “human insurance”:

  • It protects against specific financial losses that happen while the policy is in force
  • The loss must be one that is specified in and not excluded by the insurance policy
  • The insurance must be in force when the loss happens
  • Depending on the language of the insurance policy, the insurer may directly pay a provider of services or reimburse you (the insured) if you paid the expense
  • The premium differs depending on the nature and extent of the risk involved
  • The insurance policy provides a maximum amount of benefits (money) payable or reimbursable
  • The purpose of human insurance is to remove from you a portion of the risk of financial loss (expense) from a covered event. That’s called “transfer of risk.”

What About Pet Insurance?

Pet insurance covers pets, which are considered by law to be things or property. I feel differently, but that’s how the law classifies them.

Pet insurance has similarities to and differences from human insurance.

Some of the similarities include:

  • Most importantly, a pet insurance policy removes from you some of the financial burdens of paying for a covered illness or injury to your pet; some also pay a part of routine care
  • It pays benefits specified in the policy
  • It must be in force when the loss happens or when the benefit is needed
  • The insurance policy stays in force for as long as you pay premiums (unless the insurance company stops doing business in your state or your pet no longer qualifies for coverage)
  • Pet insurance policies differ in cost depending on the age and health of your pet (like life insurance and other kinds of human insurance do); they can also involve deductibles and co-payments
  • Pet insurance policies vary in price depending upon the extent of benefits they provide ); the same is true with most kinds of human insurance
  • The purpose of pet insurance is to remove from you a portion of the financial loss (expense) from a covered event.

Differences include:

  • People’s health insurance usually involves the provider submitting charges directly to an insurance company for payment; the insured (patient) pays only the co-payment and/or deductible when service is rendered
  • With pet insurance, you pay for veterinary services when rendered. Perhaps with the help of your veterinarian’s office, you then file a claim for reimbursement with the pet insurance company and get reimbursed.
  • The amount reimbursed depends on the pet insurance plan that you bought and is generally some percentage of the total veterinary charge.

Is Pet Insurance Worth Buying?

According to the American Pet Products Association, Americans will spend about $15.9 Billion in veterinary care for their pets in 2016. That’s a lot of money by anybody’s standards.

Whether or not pet insurance is worth it to you depends on many factors, some predictable and some unpredictable, including:

1. The nature of the illness or accident for which your pet needs care (unpredictable)
2. The age of your pet (you can’t control age but age can be accompanied by chronic health conditions that need ongoing care)
3. The breed of your pet (predictable if you do your research; some breeds are more prone to certain conditions than others); dogs are costlier to insure than cats, too
4. Where you live and if you plan to move (predictable, so be aware that pet insurance companies may base their reimbursements on the going rate for services in a certain vicinity)
5. If you travel with your pet, you will not be prevented from using the pet insurance due to complicated “network” rules. Have your pet treated as necessary, pay the charge, and when you return home submit the bill for reimbursement
6. Whether the reimbursement rate is a fixed percentage of the charge or whether the pet insurance company determines what it thinks is “reasonable.” (“what is reasonable” injects a lot of unpredictability). Sometimes the term “usual and customary” is used. If so, make sure that it applies to “usual and customary” charges in your area.
7. Like any other kind of insurance, a big factor is whether or not you are willing to play the odds of coming out of pocket for charges that could have been covered, at least in part, by paying a comparatively small insurance premium
8. Having pet insurance helps to budget health care cost without breaking the bank
9. Many pet insurance plans pay for inoculations and sometimes, routine check-ups. Therefore, you won’t be endangering your pet’s health by skipping them.