What Is Pet Insurance, and Do You Need It?

A white dog with black spots wearing a black collar
Les Hill

Feels like you’re already up to your eyeballs in insurance payments: homeowner’s (or renter’s), auto, medical, dental, vision, travel  – and now along comes another one to consider: pet insurance.

Pet insurance is an optional policy you can purchase to tackle the costs of your pet’s medical care. Is it right for you and your furry best friend? Some pet owners swear by it, and some won’t touch it with a 10-foot pole.

Pet Insurance Explained

Pet insurance is designed to cover the costs of veterinary care. Just like health insurance for humans, pet insurance comes in many different shapes and sizes.
However, there are a few components that you’re sure to experience:

Deductibles: You will need to pay a certain amount toward your pet’s insurance policy before the insurance company starts picking up the tab. Choose between a per-incident or annual deductible.

Co-pays: You must pay a certain fixed price or percentage of the cost of every vet or hospital visit. You must also pay a certain amount of each procedure after your deductible is met. Some co-pays are as low as 15% or 20%, but others stray above 50%.

Maximum payouts: Life would be simpler if insurance companies covered all of the true medical costs we incur, but even your dog or cat is restricted to receiving a certain amount of money from the insurance company. You’ll potentially be held to a maximum payout per incident, per year, per body system, and per the lifetime of your pet.

Premiums: In addition to deductibles and copays, you also have to worry about the monthly or annual premium for your pet’s insurance policy. Your pet’s age, health, and breed help determine the premium.

Waiting periods: Your pet’s coverage doesn’t start from the moment you sign the insurance papers. Each company sets its own waiting period; some only enroll once a year, others require a 30-day waiting period. Keep this in mind when you go to seek help for your pet’s illness or injury.

Questions About Pre-Existing Conditions

Unfortunately, most providers don’t cover pre-existing conditions. If your dog or cat has any type of diagnosed illness or problem before the insurance policy is applied, don’t expect to receive benefits for the treatment or medication of that condition.

Is Pet Insurance Worth it?

Pet insurance is a great investment for some pet owners, but a terrible waste of money for others. It really depends on your budget, the health of your pet, and your anticipation of its future needs.

The alternative to pet insurance is to pay out of pocket, in full, for all medical treatments. If you anticipate that the bills will become more expensive to handle, start shopping around. Older animals who need multiple procedures and weekly or monthly visits to the vet will accrue bills rapidly. Once you hit the required deductible, you can rest easy knowing that you only have to cover the copay cost of serious procedures like radiation therapy or ACL surgery.

However, if your pet is generally healthy and low-maintenance, you may spend more on pet insurance than you would handling each bill on your own, out-of-pocket.

Bear in mind that pet insurance policies usually require you to pay upfront and request reimbursement. So, your cash flow is going to get hit, anyway.

Finally, keep in mind all of your pet’s needs that insurance won’t cover. Few policies cover dental care, unfortunately. They also rarely cover behavioral issues, grooming, or preventative care. That puts you in the position of still covering those costs while also affording a monthly premium and copay costs.

Bottom Line

Is pet insurance worth it? If you believe your pet will require extensive medical attention or you don’t want to take any risks, then a reasonable insurance policy could be the answer. Otherwise, you may want to consider spending $30 or $40 a month on strategic preventative care instead. Keeping your pet healthy and active is the best way to minimize medical costs in the future.

Don’t wait to get out of debt! Read this: A Complete, Step-By-Step Guide to Get Out of Debt.