For a pet owner, it’s a nightmare scenario. Your beloved pet is gravely ill. Treatment is an option, but it costs thousands of dollars you don’t have. You realize that in order to end the animal’s suffering, you may have to put it down. This situation even has a name. It’s called economic euthanasia.

Of course, fear of economic euthanasia is not the main reason pet owners take out insurance. Having a pet carries its own set of costs, and medical care can be a big part of them. The thinking is that, as with humans, pet health insurance may help keep expenses in check. But does it work? What does pet insurance pay for? How much does it cost? Most important, is it worth it?

Key Takeaways

  • Pet insurance is similar to health insurance for humans, but it has many restrictions not found in human coverage.
  • Veterinary care can be costly, running into thousands of dollars in the case of a serious accident or illness.
  • Most pet insurance operates through an arrangement in which you pay up front and are reimbursed after treatment.
  • Wellness (routine) coverage insurance is probably not worth considering, as the cost of routine care runs about the same as the amount you pay in premiums.
  • With careful attention to the cost of premiums, deductibles, and co-pays, accident-only—or accident and illness—coverage can bring peace of mind at a reasonable cost.

Pet Ownership vs. Pet Insurance

The Insurance Information Institute cites a recent American Pet Products Association (APPA) survey that says 67% of American families own a pet. Just under 75% of those families have a dog, 50% have a cat, roughly a third have birds, fish, reptiles, or other small animals, and just under 2% own a horse as a pet.

Only 1.7%

of all dogs and cats in the U.S. are insured.

When it comes to pet insurance, however, the numbers are much different. According to the North American Pet Health Insurance Association (NAPHIA), just 1.7% of the more than 151 million dogs and cats in the U.S. are insured. The number of insured pets other than dogs and cats makes up a tiny fraction of a percent. For that reason, this discussion will center on dogs and cats.

What Pet Care Costs

With average annual routine veterinary care costing between $200 and $400 for a dog—and $90 to $200 for a cat—routine care is not the main reason you might want to consider pet insurance. This is particularly true because the average annual Wellness policy can cost $300 per year.

It’s the accident and illness part that drives up costs and is the primary reason pet owners buy insurance. For example:

  • The cost to diagnose diabetes in a cat runs about $300. Treatment generally continues for the rest of the animal’s life and costs $240 to $360 per year. 
  • If your pet develops heartworm, treatment could run between $400 and $1,000.
  • Emergency room care in the case of an accident could run $1,000 or more.
  • A torn ACL might cost up to $3,300 to treat and repair.
  • The big “C” (cancer) could cost $5,000 or more, depending on treatment.

Another factor that helps determine cost of care is breed. This is especially true for dogs, due to the fact that certain breeds are predisposed to develop certain medical conditions. Hip dysplasia—a condition in which the bones that make up the hip ball and socket of large dog breeds such as retrievers are not aligned and cause pain—is one such example. This can eventually lead to hip replacement surgery, which can cost as much as $3,500 to $7,000 per hip.

What Pet Insurance Covers

As with human health insurance, pet health insurance offers several different types of coverage, each with its own list of coverage options and costs. Although the names used vary by insurer, the three most common types of coverage are:

Wellness

As the name implies, this type of coverage typically includes vaccinations, regular tests, and dental work. This is also sometimes called “routine” or “preventative” care. Wellness coverage usually has no deductible but does not cover illness or accident.

Accident

This coverage takes care of accidental injuries, such as poisoning or ingestion of a foreign object, being hit by a car, cuts, and other physical injuries. Accident-only coverage is often preferred by owners of older pets that have aged out of comprehensive coverage.

Accident and Illness

This type of coverage is the most comprehensive and pays for veterinary treatment for injuries, illness, disease, and typically any changes to your pet’s normal condition. Depending on what the insurer offers, some pet owners opt to include wellness coverage with a comprehensive accident and illness policy.

Levels of Coverage

Within each type of coverage most insurers offer different levels, sometimes referred to with names such as “basic,” “enhanced,” and “premium.” As you might imagine, basic is the least expensive and provides the lowest level of coverage.

Unlike human health insurance, pet insurance almost never covers preexisting conditions in animals. 

Typical Coverage Conditions

Pet health insurance also comes with some other familiar health insurance features, including deductibles, co-pays, and annual or lifetime coverage caps. Preexisting conditions are almost never covered. Another common feature of pet health insurance is a waiting period, which ranges from 10 to 30 days before coverage begins.

Reimbursement Model

It’s also important to know that pet insurance generally is designed to reimburse you after you have already paid for veterinary services. The most common reimbursement amount is 80%, though 90% and even 100% coverage is sometimes available. 

Coverage Options

In addition to the coverage provided by both the type and level you choose, most insurers also offer some number of extra benefits—sometimes as part of the coverage, sometimes at additional cost. A few examples include:

  • Covering the cost of emergency treatment for the pet when out of the country
  • Liability coverage if your pet bites or injures someone (typically part of homeowner insurance but some pet insurance includes it)
  • Coverage of the cost of offering a reward for the return of a lost or stolen pet, sometimes including the reward itself
  • The cost of caring for your pet if you are hospitalized
  • Membership in an online community dedicated to pet ownership

$585

The average annual premium for accident and illness coverage for dogs in 2019 ($350 for cats)

What Pet Insurance Costs

How much you pay for pet health insurance coverage depends on a variety of factors, just as with human health insurance. These include things such as the animal’s age, health profile, breed, and the level or type of coverage you choose. Other cost factors associated with pet health insurance similar to human health insurance include annual premiums, deductibles, co-pays, and annual, lifetime, or incident caps.

While the basics are covered above, the fine print of pet insurance policies can contain important details. A few common requirements and exclusions include:

Pre-insurance exam or records requirement

Some companies require an examination by a veterinarian or at least records indicating the pet’s health history. Cost: $600 to $1,200.

Annual care requirement

Your policy may require annual wellness treatment to include vaccinations, exams, and any care advised by your veterinarian. Cost (if you don’t have Wellness coverage): $90 to $400.

Bilateral condition exclusion

This exclusion, found in some pet insurance policies, refers to medical problems that can happen on both sides of the body, including dysplasia, cruciate ligament issues, and cataracts, to name just a few. Cost (depending on the issue): Up to $5,000 or more.

Vaccinatable diseases exclusion

One trap pet owners can fall into is failing to have their pet vaccinated for a disease, only to find coverage is excluded for failure to vaccinate. Diseases that fall under this category include canine influenza, kennel cough, giardia, and parvovirus. Cost: $130 to $684.

Periodontal disease

Many pet owners are surprised to discover that although their policy provides dental exams and cleanings, it does not cover actual disease of the teeth and gums. Cost: $500 to $5,000.

Comparing Coverage and Cost

While there are many variables when it comes to the cost of pet insurance and the coverage provided by the amount you pay, a basic comparison of coverage and cost is possible.

Wellness coverage vs. wellness cost

The average cost of wellness coverage is $240 to $300 per year ($20 to $25 per month). Recall from above that the average cost of wellness or routine care is $90 to $400. If you use every available care option (some, such as spaying/neutering, can only be used once), you stand to come out ahead as much as $160, at least in that spay/neuter year. Depending on how many care options you actually use, you could just as easily lose money. For that reason, most experts advise against wellness coverage.

Accident-only coverage vs. accident cost

The average annual premium for accident-only coverage is $126 to $194 ($11 to $16 per month). Even if your pet never swallows a foreign object, breaks a bone, or gets hit by a car, many pet owners believe the relatively low cost of accident coverage is worth the peace of mind it brings. As noted above, owners of older animals that no longer qualify for illness coverage may find that accident-only coverage is their only reasonable alternative.

Accident and illness coverage vs. accident/illness cost

The majority of pet insurance policies written (98%) are for accident and illness. The average annual premium for dogs is $585 ($48.50 per month) and for cats $350 ($29 per month). This does not include wellness coverage, which is typically an extra-cost add-on. If your pet suffers no accident or illness, you recover nothing during the year. On the other hand, if it gets cancer, most of the up-to-$5,000 cost of treatment will be reimbursed. 

One Veterinarian's Alternative to Pet Insurance

The American Veterinary Medical Association (AVMA) adopted a policy of encouraging its members to educate their clients about the existence of pet insurance in 2019. The policy met with enthusiasm from some who are in favor of the opportunity to, in their opinion, educate pet owners. Others pushed back saying they were not qualified to promote insurance.

After more than 25 years of veterinary practice, Tracy Leonard, DVM, is among those who do not view pet insurance as a worthwhile expense. Instead, the Dayton, Ohio, veterinarian says that she and her staff recommend CareCredit, a type of healthcare credit card that can be used for, among other things, veterinary care. Other similar cards that also allow you to finance veterinary care include Wells Fargo Health Advantage and iCare Financial. It's important to note that healthcare credit cards are not insurance. They are simply a way to finance large medical bills over a long period of time.

Is Pet Insurance Worth It?

Looking at the average costs of care above, it’s easy to conclude that paying less than $200 per year for accident-only or $600 for accident and illness coverage would be a reasonable hedge against a multi-thousand dollar vet bill—especially if that bill could lead to something as awful as economic euthanasia.

The payoff for wellness coverage is less certain. Chances are that the amount you pay for wellness coverage will be about the same as the amount you would have paid anyway. If you decide to take out pet insurance, do your homework and look for the best coverage at the best price.