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by Brenna Fender
02/27/11

 By Brenna Fender 

Since most pet owners have health insurance for themselves, many wonder if their dogs need similar protection. But according to the July 2003 issue of Consumer Reports, “Pet insurance won’t necessarily save you money. In fact, with it, you can end up paying far more for veterinary care than if you don’t have insurance.” The Consumer Reports analysis indicates that purchasing pet insurance might increase the amount an owner pays in veterinary costs by thousands of dollars over the life of the pet. The magazine considers pet insurance to be “a form of enforced savings that almost never covers the entire bill.” The magazine reports that putting the premium into your own bank account each month would accomplish the same goal.

The pet health insurance industry has grown substantially since 2003. There are at least 11 American pet health insurance companies listed on www.petinsurancereview.com, a site dedicated to helping pet owners choose the right insurance plan. Each company offers multiple options varying from accident-only insurance to plans that cover nearly every contingency.

For dogs that never have major expenses for serious illnesses or injuries, pet health insurance can be expensive protection. Insurance companies require out-of-pocket payment of premiums, deductibles, and co-pays. Many plans exclude congenital problems that cause expensive treatments, such as hip dysplasia. But for the occasional dog that suffers a catastrophic injury or illness, some owners do reap financial benefits from having a good insurance plan already in place.

Does Pet Insurance Make Sense for You?

As Consumer Reports says, pet insurance generally works more as a form of enforced savings than as a way to really save money on veterinary services. Owners tend to pay out as much as or more than they get back over the life of the dog, barring a catastrophic illness or accident. People who have savings to draw on, credit cards, or other methods of getting sizable sums of money on short notice may prefer to simply save the money they would be putting toward premiums for use in case of emergency. Those who would be hard pressed to pay several thousand dollars up front, as well as those who prefer to know that there will always be help should their dog rack up exorbitant medical bills, may be more interested in purchasing insurance.

If you want a direct financial benefit, Christine Zink, D.V.M., who is well versed in sports-related canine injuries, has a good suggestion. She says, “You need to have really complete records of your dogs’ veterinary bills over a period of at least three years.” You need to know exactly how much you spend on veterinary care and on exactly what services and procedures.

Once you know what you currently pay in veterinary fees, determine what you actually want insurance to cover. Decide whether you are likely to want coverage for alternative forms of medicine, acupuncture, special diets, or medications. Research any diseases common to your dog’s breed and those that are found in your dog’s lines, if possible. “You need to also consider the most common expensive conditions (usually cancer) in your breed (like hemangiosarcoma or lymphoma in Goldens) and ask a) whether you would treat a dog with that (some people go to extreme lengths to treat cancer in dogs, others don't), b) if so, whether you have the financial resources to deal with a sudden catastrophic illness like that, and c) whether you have the intestinal fortitude to leave that up to chance or would prefer to be financially protected just in case,” says Zink. 

How Do You Decide Which Insurance Policy Is Right for You?

Armed with this information, you can research insurance companies and see if there is a plan that will make financial sense for you. One great source for pet insurance information is www.petinsurancereview.com, which lists insurance companies and includes comments from many individuals who have patronized these companies. Pet Insurance Review includes a rating system based on the positive and negative comments that each company has received. Keep in mind, of course, that satisfied customers are less likely to contribute their comments to this kind of website than those who have had a negative experience.

Although you can research policies online and even purchase coverage in this way, don’t make that your only method of contact. It’s very important that you call and speak to a representative.

When contacting a company, you need to ask some important questions. It is crucial that you know what is excluded by an insurance policy. Ask about breed exclusions, any diseases or injuries that aren’t covered, preexisting condition coverage, waiting periods, any age limitations, and whether you will need to follow a particular vaccine protocol to be covered. Ask specifically about any disease or problem your dog has or is likely to have (this is where your breed specific research comes in). Some companies have disease exclusions listed by breed, so while they might pay for treatment of a disease for one dog, they may not for yours. You will be surprised by what diseases some companies exclude.

As an agility competitor, you may very well wish for your dog to be covered for injuries incurred in a trial or in training. While many plans cover agility-related injuries, some, like the large and popular 24PetWatch (known in Canada as PetCare Pet Insurance) do not cover any injuries incurred by a dog that is doing “work,” including agility. Other companies may cover agility injuries but not those incurred while competing in other sports like lure coursing. Some will not cover agility if your dog is paid to compete regularly. If your dog is sponsored by a pet food company, that exclusion might affect you, so ask, ask, ask.

In addition, you need to ask some specific questions about premiums and payouts. Find out how the company figures premium increases. Some companies will only increase premiums in across-the-board cost-of-living-type of situations. If the company you like does this, ask how much it has increased each year over the last few years. Some owners have reported giant increases in the past year. Other companies will adjust premiums based on the number and types of claims you make. You might want to ask specific questions about how those increases are decided. Try to get examples based on the kinds of claims you think you may make.

One of your biggest concerns should be about how the company pays out for claims. Pet insurance differs in significant ways from health insurance for people. In most cases, the owner pays the full price to their chosen veterinarian up front and then submits a claim for reimbursement. After a claim for a covered expense is submitted, the owner will receive a portion of the money back, minus the deductible. Unlike health insurance for people, pet insurance companies do not negotiate with veterinarians for set fees. Some companies pay a percentage of the actual veterinary bill, less your co-pay and any services that are not covered. Others have a benefit schedule based on a national average cost for the treatment, or on a fee deemed “fair” by the insurance company. With this type of insurance, it doesn’t matter what your vet charges for a procedure; your payout will be based only on the amount listed on the benefit schedule. Unfortunately, benefit schedules often contain amounts far lower than what you actually pay. Contract with a company that uses these schedules with extreme care. Get a copy and compare it with what veterinarians in your area actually charge for the same services to get an idea about how much you might actually have to pay.

Find out about incident and annual maximums. Some companies also divide procedures up into separate services and pay a maximum in each category. If this happens, you can be responsible for a much larger part of the fees than you expect.

Also, ask how long that it takes for claims to be paid. Some companies are quite prompt and pay in two weeks. More take much longer.

If you think that you may have found the right company for you, ask for their complete policy to be sent to you in writing. Sometimes only the highlights of a policy are presented online. And sometimes, unfortunately, the customer service representative may give out the wrong information. You need all the details.

How Can You Make the Most of Your Money When Buying Insurance?

Many insurance plans offer several options for deductibles and percentage of payout. You can use online quote generators to tweak your coverage so that you can tailor plans to fit your budget. But there are also ways that you can cut costs.

Ask each company what discounts are available. Most offer multiple pet discounts, but some will also reduce your premiums if you belong to a particular organization or work in the veterinary medical field. For example, Petplan offers discounts for people who belong to certain organizations that are designated as “strategic partners.” Microchipped pets often get a break as well. You may also get a discount if you pay annually rather than monthly (or, more accurately, you may be charged a small amount extra if you pay by the month).

In this economy, some of us might not be able to pay the veterinarian upfront, which is usually a requirement for pet health insurance. If this problem might affect you, ask if the company has an option to pay the veterinarian directly in hardship situations (a representative for 24PetWatch says that her company does this).

Make Your Decision

After you’ve done your research, do the math. Determine what you will pay yearly for the insurance plans you like. Look at your records and see what procedures you’ve had in the past years. Apply the policy to your past expenses and figure out what the insurance company would have paid. Do you come out ahead? If not, is having a “safety net” in case of a very expensive claim worth the extra you will be paying to have insurance?

The most important part of selecting and maintaining pet health insurance coverage is for the owner to take the responsibility to read and understand the policy that she has chosen. If you really know what you are paying for, most likely, you won’t be unhappy with what you get.

Competitors Share Some of Their Pet Health Insurance Experiences

AKC Pet Healthcare Plan

"Both of my claims were paid promptly and without issue. I always said I would never subscribe to [pet health insurance] but now have it for both of my youngest dogs. It costs me around $200 a year and I have made more than that back for the lifetime of my dog. Even if I pay for 10 years, I have still recovered more than I have paid in. Without the insurance help I would never have been able to afford the multiple doses of anti venom [my dog Jinx] needed for a cottonmouth [snake] bite. She is now back in the conformation ring and winning and has also started her agility career and gotten her first legs. Without insurance she wouldn’t be around to do those things!" —Cindy Elliot

PetCare Pet Insurance (also 24PetWatch)

"I…did not like their pre-existing condition policy. Basically if you were a responsible owner and had your dog tested for things like eye or hip problems, they would consider the tests as evidence of a pre-existing condition. When I had mentioned that Fa’eth had a tucked up vulva to the vet, all UTI issues after that became pre-existing conditions, even though there was no evidence of a problem when the issue was noted by the vet in his records." —Devora Locke

Pet’s Best

"Pet’s Best is great! The claim process is easy and the payment is very fast. The Pet’s Best team is always very happy to help answer questions." —Natalie Russell

Veterinary Pet Insurance

"The money I [received] this year on my two claims paid for her policy for the year." —Mary Ann Wurst

"Payment is within four to six weeks and I’ve never, ever had any problem. VPI is absolutely tops in customer service! I recommend that everyone get insurance for their dog—it’s a great value and darn near pays for itself every year." —Julie Smarney

"[I’m] not sure [if the insurance is a good value]…when I look at what I’d have saved over the years of monthly premium payments for our dogs, I’d probably be ahead. But I’ve been very fortunate to not need to turn to insurance. Had we had more accidents, I might think differently." —Marti Wiseman

"VPI is no longer a good value and I dropped [it]. VPI paid $700 on a $3900 claim, [based on] their schedule. Their schedule of payments is way outdated and way too low. This was [my dog] Pika’s first claim in two and a half years. I had a conniption fit and dropped them and went with PetPlan." —Regina Baureis

"I feel that their repayment schedule is a little on the low side. By the time they use the deductible and their payment schedule, the insurance pays about 50% of what is actually billed by my vets. It is still worthwhile, though, as I have recovered my premium plus several hundred dollars each of the years I have had the policy on my dog." —Chris Miller

"For what is paid on a monthly basis, you never collect your money, but when it came to us spending over $6,000 on my Golden when he was diagnosed with osteosarcoma, we did collect, [although] it didn’t come close to what we spent. But it was good to get some money back. If we could put back the money each month we spent on premiums, we would have had the money it cost us. My Golden was 12 years old and we had pet insurance on him since he was about three months old at least $40.00 per month. That is roughly $5,280 spent on pet insurance. I also have it on my other two Goldens. I will keep it just in case we have a big expense like the cancer again." —Emily Forsyth

"Early on I was very happy with the company. They had pretty high standards and they paid reasonably and promptly. Over the years, their service declined and their pay schedule has not changed to keep up with current veterinary costs." —Sassie Joiris