What Is Pet Insurance and How Does It Work

The Beginner’s Guide to Pet Insurance and How To Select a Plan

If you've been a pet owner for any amount of time, then it's likely that you're familiar with the term “pet insurance,” but you may not be completely sure what it is. When it comes to pet insurance, there can be a long list of confusing terms and definitions. That can make things difficult for you, the pet owner, when it finally comes time to start shopping for a plan.

So, how do you prepare for this new foray into the world of pet insurance?

Research and education, to be precise. To bring you up to speed, let’s walk through some of the key points and terms of the pet insurance world. Once you learn the lingo, you can start shopping for a plan with confidence.

Let’s begin with the big question:

What Is Pet Insurance?

Pet insurance is reimbursement-based coverage for veterinary bills when your pet gets sick or injured.

Now, it’s important to pay attention to the “sick or injured” part of the definition. Pet insurance is defined this way because most insurance plans don't cover preventive care. They only cover things like accidents, injuries, and illnesses. If anything happens to your pet, it should be covered under the plan–no problem. Pet insurance plans these days are fairly extensive.

However, if you’re concerned about preventive coverage, you can usually find a carrier that will allow you to add it on for an additional fee.

What Is the Purpose of Pet Insurance?

Quite simply, pet insurance aims to ensure that your pet will get the healthcare services they need if they are ever injured or fall ill. The benefit of having it is that pet insurance helps offset a lot of the cost of vet bills, which can be really expensive with serious injuries or illnesses.

How Does Pet Insurance Work?

An appealing thing about pet insurance is that it's not totally dissimilar to human health insurance. After you take your pet to the veterinarian, you pay your bill as you normally would, but then you would also submit a claim online, through the insurance app, or by mail.

Once the claim is submitted and processed, you will receive reimbursement for the items that your plan covers. However, pet insurance differs from plan to plan, so it’s important that you are familiar with some of the key terms first.

• What’s a pet insurance coverage limit? This is the maximum amount a pet insurance provider will pay for your claims. Plans are available with low coverage limits beginning around $1,000, with options up to a $10,000 limit. Keep in mind, the higher the coverage limit, the higher your monthly premium will be.
• What does “deductible” mean? This is the amount you must pay for covered veterinary costs before you can start receiving reimbursements. Deductibles on pet insurance plans work the same as with human insurance plans. The higher the deductible, the lower your monthly premium will be.
• What’s a pet insurance reimbursement percentage? ? This is the percentage of covered costs paid back to you after your deductible is met. Many pet insurance providers offer reimbursement percentages in the range of 70-90%. The higher the reimbursement percentage, the higher your monthly premium will be.
• Is there a waiting period for coverage? Yes, there is an amount of time that must transpire before your coverage starts. Waiting periods will vary from provider to provider. They are implemented to ensure you’re not trying to get a pet’s pre-existing condition treated.

Choosing Pet Insurance: How to Shop for Pet Insurance That’s Right for Your Pet and Budget

Now that you're more familiar with pet insurance and some of the most common terms, you're probably close to starting the actual shopping process. Before you sign up your pet for a specific plan, there are a few things you should keep in mind when doing your insurance research.

• Take your dog’s breed and genetics into consideration. Research your pet’s breed and see if they are predisposed to any specific health problems. It’s also important to consider if your pet might be prone to any hereditary or congenital conditions. Once you know what health issues your pet could be predisposed to, you should only choose a health insurance plan that covers those conditions.
• Be aware of what’s NOT covered. Knowing what's not covered is almost as important as knowing what's covered.
• Be aware that every insurance provider is different. . They will have different waiting periods, different definitions of what is a pre-existing condition, and different conditions covered under their plans. Be mindful of that when shopping because it won't always be an apples-to-apples comparison.
• Check for custom options that are offered . Custom options are a great way to ensure all your pet's specific needs will be met.
• Don't forget about preventive care. It's likely not going to be offered under the standard insurance plans. However, you can usually tack it on as an a la carte option for an additional cost.

There’s much to learn about pet health insurance, but with a little bit of research, you’ll become knowledgeable in this field before you even know it. If you study this long enough, you will eventually be able to determine what is the best pet insurance plan for your dog or cat based on their current and future healthcare needs.